| Description |
1 online resource (72 pages) |
| Series |
IMF Working Papers ; v. Working Paper No. 09/207 |
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IMF Working Papers
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| Contents |
Cover Page; Title Page; Copyright Page; Contents; I. Introduction; II. Tobin's q Value and Market Discounts; III. The Data; 1. Tobin's q and Share of Zombie Banks; 2. Real Estate Loans and Mortgage-backed Securities; 3. Share of Mortgage-backed Securities that is Held-to-Maturity; 4. Fair Value of Mortgage-backed Securities Relative to Amortized Cost; 5. Tier 1 Capital Ratio and Share of Tier 1 Capital in Total Capital; 1. Summary Statistics for 2008, Quarterly Data; IV. Market Discounts and Valuation Effects of Real Estate Related Assets; A. Empirical Evidence on Market Discounts |
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2. Tobin's q and Real Estate Related Assets in 20083. Tobin's q and Real Estate Related Assets in 2001-2007; 4. Tobin's q Real Estate Related Assets and Asset Size; 5. Tobin's q and Additional Balance Sheet and Off-balance Sheet Items; B. Banks' Stock Price Reaction to Amendments of Fair Value Accounting Rules; 6. Event Study of New FASB Rules on Fair Value Accounting for Illiquid Assets (FAS 157), Announced on October 10, 2008; 7. Event Study of FASB Amendments to Fair Value Accounting of Hard-to-Value Assets, Announced on April 9, 2009 |
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V. Accounting Discretion on Impaired Assets and Asset ClassificationA. Accounting Discretion on Accounting for Bad Loans; 8. Loan Loss Provisions and Net Loan Charge-offs in 2008; B. Classification of Mortgage-Backed Securities; 9. Share of Mortgage-backed Securities that is Held-to-Maturity in 2008; 10. Share of Non-Guaranteed Mortgage-backed Securities that is Held-to-Maturity in 2001-2007; VI. Conclusions; Variable Definitions and Data Sources; References; Footnotes |
| 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 |
| Notes |
Print version record |
| Subject |
Banks and banking.
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Accounting -- Corrupt practices.
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Accounting -- Corrupt practices
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Banks and banking
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| Form |
Electronic book
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| Author |
Huizinga, Harry
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| ISBN |
9781452734927 |
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1452734925 |
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1451917767 |
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9781451917765 |
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