Prudential Regulation and Bank Accounting

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dc.contributor.advisorLu, Tong
dc.contributor.committeeMemberLin, Haijin
dc.contributor.committeeMemberKumar, Praveen
dc.contributor.committeeMemberLangberg, Nisan
dc.creatorZhang, Yan
dc.date.accessioned2019-09-14T23:16:23Z
dc.date.available2019-09-14T23:16:23Z
dc.date.createdMay 2019
dc.date.issued2019-05
dc.date.submittedMay 2019
dc.date.updated2019-09-14T23:16:23Z
dc.description.abstractThis study focuses on how to design a mechanism that coordinates prudential regulation and bank accounting. I study a setting in which a bank chooses its loan quality and makes its asset substitution decision. The social planner sets the regulatory leverages for banks, and the accounting regime (either fair value accounting or historical cost accounting) for banks to report on loan performance. Using the ex ante bank value as the criterion, I find that the historical cost regime dominates the fair value regime for medium values of asset substitution risk; medium values of asset substitution constraint; low values of asset specificity; low values of fundamental risk of loans; high values of marginal benefit or low values of marginal cost of loan quality; and high values of the liquidity benefit of bank debtholders. Fair value accounting dominates for other values of these parameters. This study contributes to the theoretical literature on the debate about bank opacity by incorporating both the asset side and the liability side of bank's balance sheets in designing a mechanism to coordinate prudential regulation and bank accounting. The paper makes important policy implications on prudential regulation and bank accounting such as cycle-contingent regulations, asset risk class-contingent regulations and country-contingent accounting standard.
dc.description.departmentAccountancy and Taxation, Department of
dc.format.digitalOriginborn digital
dc.format.mimetypeapplication/pdf
dc.identifier.urihttps://hdl.handle.net/10657/4645
dc.language.isoeng
dc.rightsThe author of this work is the copyright owner. UH Libraries and the Texas Digital Library have their permission to store and provide access to this work. Further transmission, reproduction, or presentation of this work is prohibited except with permission of the author(s).
dc.subjectRegulatory leverage
dc.subjectHistorical cost accounting
dc.subjectFair value accounting
dc.subjectRegulatory coordination
dc.subjectCycle-contingent regulation
dc.subjectDebt overhang
dc.subjectAsset substitution
dc.titlePrudential Regulation and Bank Accounting
dc.type.dcmiText
dc.type.genreThesis
thesis.degree.collegeC. T. Bauer College of Business
thesis.degree.departmentAccountancy and Taxation, Department of
thesis.degree.disciplineBusiness Administration
thesis.degree.grantorUniversity of Houston
thesis.degree.levelDoctoral
thesis.degree.nameDoctor of Philosophy

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