Prior to 2018, accounting rules required banks that recognize financial liabilities at fair value to record unrealized gains and losses on the liabilities attributable to changes in the banks' own credit risk, referred to as the debt valuation adjustment (DVA), in earnings each period. Using a...

This paper examines the selective trading of available-for-sale (AFS) securities by U.S. banks after the implementation of fair value accounting under Statement of Financial Accounting Standards No. 115, Accounting Standards Codification (ASC) Topic 320. Our findings suggest firms still engage...

This paper examines banks’ option to adopt the capital transitional arrangement (CTA) set out by the Basel Committee on Banking Supervision, in response to the introduction of the International Financial Reporting Standard 9 (IFRS 9), which requires the use of an expected credit loss model...