Do Accounting Standards Prevent Banks From Engaging in Performance Beneficial Hedging?
- Topics:
- Investment and Capital Markets
- Tags:
- Accounting,
- Performance,
- Financial Services,
- Financial Accounting Standards Board,
- Financial Accounting,
- Finance,
- Derivatives,
- Community Bank,
- Birmingham-Southern College,
- Bank,
- ...
- Source:
- Birmingham-Southern College
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Overview: This paper analyzes the use of derivatives by community banks before and after the enactment of FASB 133. Specifically, it tests whether FASB 133 has changed the use of derivatives by community banks and evaluates the performance of these banks in both time periods. The results indicate that FASB 133 has not discouraged community banks from engaging in risk reducing/profit maximizing derivative securities because the benefits from hedging interest rate risk with derivatives overrides the added regulatory constraints.
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Format: PDF | Size: 592KB | Date: Sep 2003 | Pages: 23
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