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Article: Market value accounting: Panacea or poison for the banking industry? (Part 1)
- Article from:
- Journal of Performance Management
- Article date:
- January 1, 1997
- Author:
CopyrightCopyright National Association for Bank Cost & Management Accounting 1997. Provided by ProQuest LLC. (Hide copyright information)
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INTRODUCTION
Traditionally, banks have used historical cost accounting to record the results of their operations and financial condition. This historical cost accounting model is based on a long-established accounting principle which provides reliable financial information. However, the savings and loan crisis of the 1980s and the explosion of new and innovative Wall Street products have caused many to question whether market value accounting would be a better accounting model for the banking industry. This traditional thesis explores the issues surrounding market value accounting to determine whether market value accounting will have a positive or negative effect on the banking industry.