Complexity and Crisis in the Financial System
Show Less

Complexity and Crisis in the Financial System

Critical Perspectives on the Evolution of American and British Banking

Edited by Matthew Hollow, Folarin Akinbami and Ranald Michie

With contributions from across the disciplines of law, history, finance, and economics, Complexity and Crisis in the Financial System offers a truly interdisciplinary study of the relationship(s) between crises and complexity in the US and UK financial markets. Taken together, the contributions in this volume not only challenge many often taken-for-granted ideas about the nature of financial crises, but also broaden our understanding of the long-term causes (and consequences) of the global financial crisis of 2007–2008.
Buy Book in Print
Show Summary Details
You do not have access to this content

Chapter 12: Financial reporting, banking and financial crisis: past, present and future

Mark Billings


This chapter examines the relationship between financial reporting, banking and crisis. The quality of banks’ financial reporting is often cited as a contributory factor in banking crises. There is now a broad presumption in favour of greater disclosure in banks’ published financial statements. This is argued to enhance transparency and improve information flows, thereby contributing to market discipline and financial stability, and lead to the more efficient allocation of resources, with sound banks rewarded and the unsound penalised. But transparency in banks’ financial statements has not always been considered advantageous and, arguably, much remains to be done to realise full, or even sufficient, transparency. The chapter consists of three sections. The first summarizes the evolution of financial reporting in the twentieth century in the British banking sector, where, until relatively recently, regulation permitted obscurity, on the grounds that this supported stability. The second section examines the focus of particular controversy in ‘our’ financial crisis of the early twenty-first century – fair value accounting, sometimes referred to as ‘mark-to-market’. The final section discusses shortcomings in some other aspects of financial reporting and accounting in banking in the years preceding ‘our’ crisis. In the inevitable post-crisis reaction, regulators signalled their dissatisfaction with financial reporting, and long-held concerns about the quality of audits and concentration in the market for audits of large companies were again raised. This section also examines some of the numerous suggestions for improving financial reporting in the wake of ‘our’ crisis, many of which remain to be implemented.

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.

Further information

or login to access all content.