Petr Hájek, Gaukhar Alimbekova, Adilya Baydildina, Nurbek Adambekov, Kholnazar Amonov


In 2007 two rules SFAS 157 and SFAS 159 were adopted into fair value accounting scheme just into looming financial crisis. These rules had high pro-cyclical effect and significantly affected banking sector stability during the recession and its “profitability” during the years after the recession. Important parts of these rules were relaxed in April 2009 and then some other suspended in January 2016. First, FASB let the companies to use whatever valuation methods to value balance sheet securities in terms of fair value accounting they considered best within the SFAS 157 framework. Second, FASB scraped Debt Value Adjustments, part of SFAS 159, from income statements watched most by investors. This article reviews the implications of mark to market rules, its pro-cyclicality and impact on banks’ balance sheets.


SFAS 157, SFAS 159, Mark to Market rule, Banking crisis, Fair Value Accounting

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