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on Accounting and Auditing |
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Issue of 2025–09–01
four papers chosen by |
| By: | Nina Boyarchenko; Kinda Hachem; Anya V. Kleymenova |
| Abstract: | A large literature at the intersection of economics and finance offers prescriptions for regulating banks to increase financial stability. This literature abstracts from the discretion that accounting standards give banks over financial reporting, creating a gap between the information assumed to be available to regulators in models of optimal regulation and the information available to regulators in reality. We bridge insights from the economics, finance, and accounting literatures to synthesize knowledge about the design and implementation of bank regulation and identify areas where more work is needed. We present a simple framework for organizing the relevant ideas, namely the externalities that motivate bank regulation, the rationales for allowing accounting discretion, and the use of discretion to circumvent regulation. Our takeaway from reviewing work in these areas is that academic studies of bank regulation and accounting discretion require a more unified approach to design optimal policy for the real world. |
| Keywords: | Bank regulation; Discretion; Financial stability |
| JEL: | D62 E44 G21 G28 M41 |
| Date: | 2025–08–04 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgfe:2025-54 |
| By: | Arno Botha; Tanja Verster |
| Abstract: | Under the International Financial Reporting Standards (IFRS) 9, credit losses ought to be recognised timeously and accurately. This requirement belies a certain degree of dynamicity when estimating the constituent parts of a credit loss event, most notably the probability of default (PD). It is notoriously difficult to produce such PD-estimates at every point of loan life that are adequately dynamic and accurate, especially when considering the ever-changing macroeconomic background. In rendering these lifetime PD-estimates, the choice of modelling technique plays an important role, which is why we first review a few classes of techniques, including the merits and limitations of each. Our main contribution however is the development of an in-depth and data-driven tutorial using a particular class of techniques called discrete-time survival analysis. This tutorial is accompanied by a diverse set of reusable diagnostic measures for evaluating various aspects of a survival model and the underlying data. A comprehensive R-based codebase is further contributed. We believe that our work can help cultivate common modelling practices under IFRS 9, and should be valuable to practitioners, model validators, and regulators alike. |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2507.15441 |
| By: | Ruud A. De Mooij; Shafik Hebous; Michael Keen |
| Abstract: | This paper examines the efficiency of the Value Added Tax (VAT), focusing on its role as a revenue-raising tool and its use to achieve non-revenue objectives. The analysis highlights the VAT's potential ability to generate revenue with minimal distortions, emphasizing its advantages over alternative taxes, such as turnover taxes and tariffs, particularly in minimizing the cascading effects of input taxation. The paper also explores the VAT as a macroeconomic policy tool, especially in counter-cyclical fiscal policy, and its potential to address environmental and health objectives. It concludes that a well-designed and implemented VAT is a highly efficient revenue-raising tool, surpassing other forms of consumption taxation, but cautions against its misuse in industrial policy and other contexts for which it is ill-suited. |
| Keywords: | value added tax, efficiency, welfare, consumption taxes |
| JEL: | H21 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12089 |
| By: | Krassen Stanchev |
| Abstract: | Since 1989, flat tax (FT) reforms have been attempted in Europe and the EU only by ex-communist countries and Iceland. In the 1990s all ex-communist countries lowered and simplified their income taxes, often starting with corporate taxes. In the late 1990s and early 2000s they also reformed their social security systems. In many respects the tax reforms have never stopped, but with regard to income taxation they are less radical than in the 1990s and at the turn of this century. Even when there were reforms re-establishing progressive taxation, they have almost never returned to complex sets of nominal rates and a steep vertical ladder of progressive thresholds. This report attempts to reconstruct the reasons why EU countries moved to introduce proportional taxation on either corporate or personal income, or both, as well as the reasons behind five of them returning to progressive taxation. These reforms happened in different political and economic contexts. It would be difficult to identify unequivocal causality between flattening taxes and economic performance. However, the report compares the dynamics of economic growth and factors related to competitiveness for periods before and after the reforms were launched. The same effort has been made for indicators of wealth and disposable income. The analysis allows for a discussion of lessons learnt and of the prospects for further reforms. The report concludes that it seems impossible to prove that FT systems have been a key contributor to higher economic growth. However, it does seem that, if the social security contributions remain relatively stable and are financed by other tax revenues, they have a positive impact on fiscal performance and general welfare. |
| Keywords: | tax system, tax reform, proportional taxation, progressive taxation, corporate tax, personal income tax, economic performance, ex-communist countries, EU |
| JEL: | E62 H23 H24 H25 H26 H31 H32 |
| Date: | 2023–12–07 |
| URL: | https://d.repec.org/n?u=RePEc:sec:mbanks:0175 |