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- Title
A Countercyclical System of Capital Requirements.
- Authors
Wallace, Marsha
- Abstract
The article explores the capital requirements for financial institutions that is countercyclical in nature and why a countercyclical approach to setting capital requirements is not of necessity incompatible with fair-value accounting. The nature of the bubble that give rise to the recent economic crisis is analyzed. The author demonstrates how traditional focus on short-term accounting earnings and a misuse of equity valuation formulas likely contributed to the view that adding leverage adds value.
- Subjects
CAPITAL requirements; FAIR value accounting; GLOBAL Financial Crisis, 2008-2009; STOCK prices; FINANCIAL leverage; ACCOUNTING
- Publication
Bank Accounting & Finance (08943958), 2009, Vol 22, Issue 5, p3
- ISSN
0894-3958
- Publication type
Article