Ifrs Impact on French Banks
QUANTITATIVE RESEARCH METHODS FOR FINANCE
The IFRS measures impact on French bank securities volatility during the financial crisis
In Group with Mr Duchemin and Mr Melloul Benjamin CNUDDE
Introduction: The world of finance is from now global and has huge repercussions all over the planet as we could see during those last years of the recent recession. The subprime crisis triggered in the United States during the second half of 2006 has quickly turned into an international financial crisis with huge repercussions on the European financial markets. Banks and financial intermediaries were particularly affected by it because of the fair value accounting for financial instruments. As we all know, the real estate crisis in the United States has been the triggering element of the financial crisis which has initiated the international financial crisis we are facing now. Credit rarefaction and an obvious rise of market volatility were the fundamental consequences of the crisis. And to stop the proliferation of the crisis worldwide (especially provoked by the “toxic” assets owned by banks) comes the International Accounting Standards Board (IASB) intervention. We will discuss if such an intervention has managed to prevent a rise of the French banks securities volatility. In the financial crisis we are passing through, many personalities criticized the installation of IFRS (International Financial Reporting Standards), and notably concerning the impact on fair value. According to Christine Lagarde (French Minister of Economy, Industry and Employment during its audition by the commission of finance and senate) their use would lead to a decrease of the banks’ valorization. Others, on the contrary, consider that international accounting standards put in place cannot be charged of being responsible of the current crisis and support the idea that IFRS intervention leads to an early diagnosis of the financial problems. We will see and discuss in what the application of the
The IFRS measures impact on French bank securities volatility during the financial crisis
In Group with Mr Duchemin and Mr Melloul Benjamin CNUDDE
Introduction: The world of finance is from now global and has huge repercussions all over the planet as we could see during those last years of the recent recession. The subprime crisis triggered in the United States during the second half of 2006 has quickly turned into an international financial crisis with huge repercussions on the European financial markets. Banks and financial intermediaries were particularly affected by it because of the fair value accounting for financial instruments. As we all know, the real estate crisis in the United States has been the triggering element of the financial crisis which has initiated the international financial crisis we are facing now. Credit rarefaction and an obvious rise of market volatility were the fundamental consequences of the crisis. And to stop the proliferation of the crisis worldwide (especially provoked by the “toxic” assets owned by banks) comes the International Accounting Standards Board (IASB) intervention. We will discuss if such an intervention has managed to prevent a rise of the French banks securities volatility. In the financial crisis we are passing through, many personalities criticized the installation of IFRS (International Financial Reporting Standards), and notably concerning the impact on fair value. According to Christine Lagarde (French Minister of Economy, Industry and Employment during its audition by the commission of finance and senate) their use would lead to a decrease of the banks’ valorization. Others, on the contrary, consider that international accounting standards put in place cannot be charged of being responsible of the current crisis and support the idea that IFRS intervention leads to an early diagnosis of the financial problems. We will see and discuss in what the application of the
Bibliography: Websites : http://www.ifrs.com/ http://images.vnunet.com/v6_static/oracle/pdf/070805-ifrs.pdf (Impact of new IFRS rules) http://www.iasplus.com/standard/ifrs07.htm (Summary of IFRS 7) http://entreprises.pwc.fr/IFRS_63.html http://www.ifrs.org/Financial+crisis/Response+to+the+credit+crisis.htm http://www.jdf.com/dossier/2008/03/21/04007-20080321ARTHBD00061-les-normes-comptablesifrs-accentuent-la-crise-financiere.php Books: “Information financière en IFRS” by Pascale Delvaille, Christopher Hossfeld, Anne Le Manh. Litec professionnels ed. « Financial Reporting Under IFRS: A Topic Based Approach » de Wolfgang Dick et Franck Missionier-Piera. Wiley ed. “Understanding IFRS Fundamentals: International Financial Reporting Standards” Nandakumar Ankarath, Kalpesh J. Mehta, T.P. Ghosh, Yass A. Alkafaji. Wiley ed.