Taking Diversity into Account: the Diversity of Financial Institutions and Accounting Regulation - Archive ouverte HAL
Pré-Publication, Document De Travail Année : 2017

Taking Diversity into Account: the Diversity of Financial Institutions and Accounting Regulation

Gaëtan Le Quang

Résumé

The global financial crisis and what followed point out at least two major failures of the financial system: its inability to contain liquidity risk and its inability to fund long term investments. We think that these two problems come from the setting up of rules and practices that tend to homogenize market participants’ incentives and behaviors. Fair value accounting is one element of this set of practices and rules. If the rationale behind fair value accounting – that is enhancing transparency in order to limit unreported losses and manipulations – can justify its use in the case of short-term financial institutions (meaning institutions whose time horizon is short because of the maturity of their liabilities) that constantly face the risk of a sudden liquidity need, it seems totally irrelevant when it comes to long-term financial institutions that will not face liquidity needs before ten or twenty years. In this perspective, we develop a model that shows that an accounting regulation that takes the diversity of financial institutions into account offers better results both in terms of liquidity and in terms of efficiency than a regulation that ignores this diversity.
Fichier principal
Vignette du fichier
WP_EcoX_2017-10.pdf (755.13 Ko) Télécharger le fichier
Origine Fichiers produits par l'(les) auteur(s)

Dates et versions

hal-04141663 , version 1 (26-06-2023)

Identifiants

  • HAL Id : hal-04141663 , version 1

Citer

Gaëtan Le Quang. Taking Diversity into Account: the Diversity of Financial Institutions and Accounting Regulation. 2017. ⟨hal-04141663⟩
6 Consultations
7 Téléchargements

Partager

More