Accounting for Risks in Banks: The Link between Prudential Regulation and Accounting in Banks

Abstract

In light of the broader prudential concerns that continue to shape the international financial landscape, this article illustrates two key aspects of the link between financial regulation and accounting for risk in banks. First, it emphasizes the function of capital and liquidity in banks, particularly in context of the different risks and vulnerabilities that banks face. Second, it identifies some important evolutions in accounting standards and prudential oversight of financial institutions.