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Bank cash flows – a source of new insight?

Paul Klumpes (), Peter Welch () and Andres Reibel ()
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Paul Klumpes: Imperial College Business School, Postal: South Kensington Campus, London SW7 2AZ,
Peter Welch:, Postal: UK,
Andres Reibel: Imperial College Business School, Postal: South Kensington Campus, London SW7 2AZ,

Journal of Financial Transformation, 2009, vol. 26, 69-78

Abstract: The financial crisis has exposed deep-rooted problems with banks' financial reporting. Long neglected in analyses of bank performance, this article recommends a new focus on bank cash flows. We identify weaknesses and deficiencies in the existing literature on banking performance. Short case studies of Northern Rock and HBOS show that analysis of the cash flow statement can provide fresh insight into a bank's financial health. However, the article also argues that the international accounting standard governing cash flow reporting is poorly suited to the needs of banks. A survey of U.K. and Eurozone banks reveals inconsistencies between banks, a lack of detail, key flows netted off, and poor reconciliation with other financial statements. The article concludes by proposing various changes to improve the quality and utility of bank cash flow reporting.

Keywords: Financial crisis; bank financial reporting; cash flow reporting (search for similar items in EconPapers)
JEL-codes: G01 G21 M41 M48 (search for similar items in EconPapers)
Date: 2009
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