Fair value accounting and financial stability

Andrea Enria, Lorenzo Cappiello, Frank Dierick, Grittini Sergio, Andrew Haralambous, Angela Maddaloni, Philippe Molitor, Fatima Pires and Paolo Poloni

No 13, Occasional Paper Series from European Central Bank

Abstract: Accounting standard setters are considering the wider use of fair value accounting. This paper focuses on the financial stability implications of a move in the banking sector from the current accounting framework to full fair value accounting. A simulation exercise is performed on how various external shocks affect the balance sheet of an average European bank under the two frameworks. The paper further investigates the impact of the alternative framework on the main balance sheet items, and the interaction with banks JEL Classification: G14, G21, G28, M41

Keywords: accounting; banks; fair value; financial regulation; financial reporting; Financial Stability; risk management (search for similar items in EconPapers)
Date: 2004-04
Note: 234084
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Citations: View citations in EconPapers (45)

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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbops:200413

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