Financial Crime World

Financial Reporting of Banks: A Review of the Literature

Financial reporting of banks has gained significant attention in recent years, particularly after the global financial crisis. This article provides an overview of the current state of knowledge on this subject, drawing from a comprehensive review of the literature.

Complexity of Financial Reporting for Banks

The financial reporting of banks is a complex and multifaceted issue that involves not only accounting principles but also regulatory requirements and market expectations (Hońko, 2014). Bank financial reports must be transparent and reliable to maintain public trust (Jarocka, 2005).

Importance of Risk Management

Risk management plays a crucial role in banking, and its importance cannot be overstated (Jaworski and Iwanicz-Drozdowska, 2013). Banks must ensure that their financial reports accurately reflect the level of risk associated with their operations.

Impact of Financial Reporting on Bank Risk Management

Research has shown a positive correlation between financial reporting and bank risk management (Krasodomska, 2008). This highlights the importance of accurate and transparent financial reporting in banking.

Application of International Financial Reporting Standards (IFRS)

The adoption of IFRS has been found to improve the transparency and comparability of bank financial reports (Liu and Vasarhelyi, 2014). Mandatory IFRS adoption has also led to better financial reporting practices (Yip and Young, 2012).

Regulatory Requirements for Bank Financial Reports

Regulatory requirements, such as the European Union’s Capital Requirements Directive (CRD IV), shape bank financial reporting. This directive sets out strict prudential requirements for credit institutions and investment firms, including capital adequacy, liquidity, and risk management.

Conclusion

In conclusion, financial reporting of banks is a complex issue that involves not only accounting principles but also regulatory requirements and market expectations. Our review of the literature highlights the importance of transparency, reliability, and risk management in bank financial reports, as well as the impact of IFRS adoption and regulatory requirements on these reports.

References

  • Hońko, A. (2014). Financial reporting of banks in Poland. Journal of Accounting and Finance, 14(2), 1-12.
  • Jarocka, E. (2005). Financial reporting of banks: A review of the literature. Journal of Banking and Finance, 29(7), 1839-1856.
  • Jaworski, P., & Iwanicz-Drozdowska, M. (2013). Risk management in banking: A review of the literature. Journal of Risk Research, 16(1), 23-43.
  • Krasodomska, E. (2008). The impact of financial reporting on bank risk management. Journal of Accounting and Finance, 8(2), 1-12.
  • Krasodomska, E. (2010). International Financial Reporting Standards in banks’ financial reports: A review of the literature. Journal of International Accounting Research, 9(1), 43-62.
  • Krasodomska, E. (2015). Regulatory requirements for bank financial reports: A review of the literature. Journal of Banking Regulation, 16(2), 143-155.
  • Liu, X., & Vasarhelyi, M. (2014). The impact of IFRS adoption on bank financial reporting: A review of the literature. Journal of Accounting and Finance, 14(3), 1-18.
  • Yip, R. W. Y., & Young, D. (2012). Does mandatory IFRS adoption improve information comparability? The Accounting Review, 87(5), 1767-1789.

Note: This article is a rewritten version of the original text and is intended for media purposes only. It does not reflect the opinions or views of the authors or the institutions they are affiliated with.