Financial Crisis and Accounting Information:ubprime Loan and Related Financial Instruments
Date Issued
2009
Date
2009
Author(s)
Chen, Yin-Chun
Abstract
Subprime loan and related financial instruments are used to study the financial crisis of 2008. This financial crisis results from the overextension of credit and the sophistication of securitization. The liquidity crunch influences financial market and global economy negatively. Many financial institutions are taken over by the government or fall into bankruptcy. To mitigate the impact of financial crisis, central banks add capital to markets, decrease interest rate or adopt financial bailouts. Financial crisis leads to a significant decrease in the volume and level of activity for assets or liabilities. The difficulty of determination for fair value of financial instruments causes some criticisms and challenges. The adoption of fair value accounting actually increases the relevance of financial information and helps to reflect the severity of financial problems. Through comparison and analysis of the financial standards, the thesis provides some suggestions to implement fair value accounting. The following are the propositions of enforcing fair value accounting:. Enhance disclosure of valuation techniques and assumptions.. Simplify recognition and measurement of financial instruments.. Establish valuation standards and cultivate related professionals. Strengthen the acquisition of fair value information . Augment internal control of financial instruments valuation.. Improve fair value audit.. Reinforce the supervision of financial markets.
Subjects
financial crisis
subprime loan
financial assets securitization
fair value accounting
information disclosure
financial supervision
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ntu-98-R96722004-1.pdf
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