Hidden Bibliographic Details
| Other authors / contributors: | Laeven, Luc, author.
International Monetary Fund. Research Department.
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| ISBN: | 1462332552
9781462332557
1451873549
9781451873542
128284413X
9781282844131
9786612844133
6612844132
1452734925
9781452734927
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| Digital file characteristics: | data file
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| Notes: | Includes bibliographical references (pages 24-28).
English.
Print version record.
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| Summary: | This paper shows that banks use accounting discretion to overstate the value of distressed assets. Banks' balance sheets overvalue real estate-related assets compared to the market value of these assets, especially during the U.S. mortgage crisis. Share prices of banks with large exposure to mortgage-backed securities also react favorably to recent changes in accounting rules that relax fair-value accounting, and these banks provision less for bad loans. Furthermore, distressed banks use discretion in the classification of mortgage-backed securities to inflate their books. Our results indicate that banks' balance sheets offer a distorted view of the financial health of the banks.
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| Other form: | Print version: Huizinga, Harry. Accounting discretion of banks during a financial crisis. [Washington, D.C.] : International Monetary Fund, ©2009
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