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Accounting Standards in the U.S. Banking Industry during the Financial Crisis

Accounting Standards in the U.S. Banking Industry during the Financial Crisis

Jorge A. Romero
Copyright: © 2016 |Pages: 14
ISBN13: 9781466694842|ISBN10: 146669484X|EISBN13: 9781466694859
DOI: 10.4018/978-1-4666-9484-2.ch007
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MLA

Romero, Jorge A. "Accounting Standards in the U.S. Banking Industry during the Financial Crisis." Handbook of Research on Financial and Banking Crisis Prediction through Early Warning Systems, edited by Qaiser Munir, IGI Global, 2016, pp. 141-154. https://doi.org/10.4018/978-1-4666-9484-2.ch007

APA

Romero, J. A. (2016). Accounting Standards in the U.S. Banking Industry during the Financial Crisis. In Q. Munir (Ed.), Handbook of Research on Financial and Banking Crisis Prediction through Early Warning Systems (pp. 141-154). IGI Global. https://doi.org/10.4018/978-1-4666-9484-2.ch007

Chicago

Romero, Jorge A. "Accounting Standards in the U.S. Banking Industry during the Financial Crisis." In Handbook of Research on Financial and Banking Crisis Prediction through Early Warning Systems, edited by Qaiser Munir, 141-154. Hershey, PA: IGI Global, 2016. https://doi.org/10.4018/978-1-4666-9484-2.ch007

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Abstract

The global financial crisis became evident when U.S. house prices fell related to the subprime mortgage-backed securities crisis. In the years preceding the financial crisis of 2008, there was a real estate bubble that pushed U.S. real estate prices to high levels, and at the same time financial institutions were holding large amounts of subprime mortgage-backed securities. Fair value accounting (FVA) and its link to the recent global financial crisis has been a focus of discussion and interest for accounting researchers, financial analyst and policy makers. During the financial crisis, a large percentage of assets in the balance sheets of banks were calculated using fair value. The main concern was that those assets were calculated using mark-to-model accounting (Goh, Ng, & Yong 2009). There are still contradictory conclusions on the implications of fair value accounting and the global financial crisis (Laux & Leuz, 2009). The main objective of this chapter is to provide a better understanding of the global financial crisis and of the mechanisms of fair value accounting.

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