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Pré-Publication, Document De Travail Année : 2005

Marking to Market, Liquidity, and Financial Stability

Guillaume Plantin

Résumé

This paper explores the financial stability implications of mark-to market accounting, in particular its tendency to amplify financial cycles and the “reach for yield”. Market prices play a dual role. Not only do they serve as a signal of the underlying fundamentals and the actions taken by market participants, they also serve a certification role and thereby influence these actions. When actions affect prices, and prices affect actions, the loop thus created can generate amplified responses - both in creating bubble-like booms in asset prices, and also in magnifying distress episodes in downturns.
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Dates et versions

hal-03459036 , version 1 (30-11-2021)

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Guillaume Plantin, Haresh Sapra, Hyun Song Shin. Marking to Market, Liquidity, and Financial Stability. 2005. ⟨hal-03459036⟩

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