Bank efficiency estimation and the change of the accounting standards: evidence from Greece

Dimitras, Augustinos I.; Kosmidou, Kyriaki; Αποστόλου, Απόστολος

doi:10.1504/ijmfa.2010.032488

Cited by 9 publications

(4 citation statements)

References 37 publications

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“…In terms of the efficiency aspects also, there are very limited studies that have focussed on the impact of fair value accounting practices on the efficiency of banks. Dimitras et al (2010) having studied the changes in the accounting standards on the efficiency estimates of ten Greek banks using the financial data of years 2004 and 2005 under data envelopment analysis (DEA), find that the change in accounting rules results in important differences in estimated efficiency of the banks in the sample. However, they do not explain whether fair value accounting improves efficiency over historical cost principles.…”

Section: Fair Value Accounting Practices and Performancementioning

confidence: 99%

Fair value accounting practices in the banking industry: a possible opportunity to launder money through manipulated performance

Perera

Ajward

Jayasekara³

2021

JMLC

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Purpose The purpose of this paper is to discuss the possible money laundering threats in fair value accounting practices giving particular attention to the list of predicate offences under recommendations of Financial Action Task Force (FATF). Design/methodology/approach This paper discusses case studies related to global accounting scandals and link outcomes of those scandals with the list of predicate offences given in FATF recommendations to build propositions. Findings The analysis reveals that legal proceedings on major accounting scandals show that legal proceedings have been restricted owing to a lack of evidence because of the technicality of frauds. Often the authorities have failed to prove cases under the list of current predicate offences which can be linked to accounting malpractices, i.e. fraud. Therefore, policymakers are required to revisit the list of predicate offences and the feasibility of considering accounting malpractices as a predicate offence to strengthen the corporate governance practices in regulated institutions. The adoption of fair value accounting practices provides opportunities to managers to adopt earnings management practices under a fair value accounting regime to maintain stable performance. The fair value practice recognizes unrealized gains which are not based on transactions giving bank managers an opportunity to repeat the outcomes of the discussed accounting scandals. Therefore, it is essential to criminalize accounting malpractices to strengthen the corporate governance practices in the banking industry and prevent possible accounting scandals. Research limitations/implications This study was designed to discuss the implications of fair value accounting practices on possible opportunities of money laundering. This paper provides only a viewpoint based on the analysis. Therefore, an empirical analysis is required to establish the authors’ views in a fair value accounting regime. Originality/value This paper is an original work done by the authors which discuss the implications of fair value accounting practices on possible money laundering. The views are original ideas of the authors in this context.

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Section: Fair Value Accounting Practices and Performancementioning

confidence: 99%

Fair value accounting practices in the banking industry: a possible opportunity to launder money through manipulated performance

Perera

Ajward

Jayasekara³

2021

JMLC

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“…This cautionary approach is suggested by the banking efficiency literature. For example, Dimitras et al 49,50 found that the changes in accounting standards introduced by the transition to the IFRS significantly affected the estimation of efficiency for EU banks.…”

Section: Data Sourcesmentioning

confidence: 99%

Do financial reforms always improve banks efficiency and competition? A long-term analysis of Turkey’s experience

Altintas¹,

Ferrari²,

Girardone³

2021

J Bank Regul

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Financial policy changes are aimed at improving banks efficiency and competition; however their effectiveness in the context of emerging economies is far from obvious. Using Turkey as a case study, we create a unique data set and analyse the impact of almost 30 years of financial policy changes on the cost efficiency and competitiveness of its banks. We estimate a stochastic cost frontier with inefficiency determinants, then rely on two complementary approaches for the measurement of competition: a novel implementation of the Boone model, and the Persistency of Profits (POP) model. We find that deregulation does not bring the expected benefits, and performance starts improving only after the introduction of prudential reregulation policies. The entry of foreign banks helps technological progress, competition and efficiency improvements, and all banks eventually reach similar efficiency levels.

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“…This shows that the state of economy is a significant factor in manipulating financial performance of banks under the fair value option. Dimitras, et al, (2010) having studied the changes in the accounting standards on the efficiency estimates of 10 Greek banks using the financial data of years 2004 and 2005 under DEA, find that the change in accounting rules results in important differences in estimated efficiency of the banks in the sample. However, they do not explain whether the fair value accounting improve the efficiency over historical cost principles.…”

Section: Literature Reviewmentioning

confidence: 99%

Fair Value Accounting Practices and Efficiency of Banks: A Theoretical Perspective

Jayasekara¹,

Perera²,

Ajward³

2018

AFR

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This conceptual paper discusses the impact of fair value accounting practices on performance of commercial banks in relation to the established banking theories i.e. Credit creation, fractional reserve and financial intermediation theory. These theories are discussed in view of historical cost accounting principles and fair valued accounting principles considering the performance in terms of efficiency during different stages of economic conditions. The analysis shows that fair value accounting practices in banks create reserves in economic booms improving efficiency and deteriorate created reserves in economic downturns causing financial crises. Enhanced financial performance in terms of unrealized gains improves the overall efficiency of banks in view of the intermediation approach of the financial intermediation theory. Therefore, it can be interpreted that external factors such as accounting, infrastructure, and technology can influence efficiency of the financial intermediation process. This is the first study to discuss the implications of fair value accounting on banking theory in view of performance of banks and stability of financial system.

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Bank efficiency estimation and the change of the accounting standards: evidence from Greece

Cited by 9 publications

References 37 publications

Fair value accounting practices in the banking industry: a possible opportunity to launder money through manipulated performance

Fair value accounting practices in the banking industry: a possible opportunity to launder money through manipulated performance

Do financial reforms always improve banks efficiency and competition? A long-term analysis of Turkey’s experience

Fair Value Accounting Practices and Efficiency of Banks: A Theoretical Perspective

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