Journal of Financial Intermediation Vol. 3 No. 1 1993
Real Bills Revisited: Market Value Accounting and Loan Maturity
Abstract
This paper analyzes the effects of market value accounting (MVA) on loan maturity. I show that in the presence of asymmetric information MVA introduces a bias into asset valuation against longer-term illiquid assets. This bias increases interest rates for long-maturity loans and induces a shift to short-term self-liquidating loans. With the liquidity production of banks curtailed, borrowers may face "excessive" liquidation. The desirability of MVA applied to loans is thus questionable. Journal of Economic Literature Classification Numbers: G21, G28, M41.
- DOI
- 10.1006/jfin.1993.1002
- Volume
- 3
- Issue
- 1
- Pages
- 51-76
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref