We investigate three prominent German bank failures in the financial crisis of 2007-2008, IKB Deutsche Industriebank, Landesbank Sachsen, and Hypo Real Estate (HRE). The cases provide a unique setting to analyze the interrelation between financial reporting, regulation, and financial stability....

The contagion potential of mark-to-market accounting rules interacting with regulatory constraints is compared to that of funding constraints in a network of banks. The fair value accounting rules were amended at the height of the crisis to break the vicious link between allegedly irrational...

Fair value accounting (FVA) rules were relaxed through an ad-hoc amendment of IAS 39 at the height of the financial crisis in October 2008. The extent to which the trade-off between financial stability and transparency implied by this measure was reflected in the reaction of bond and equity...