Financial Crisis Literature Review

1. Introduction

In the financial crisis is still a lot of people are thinking because it has not yet been adopted in some countries. Because bitter fluctuations in Portugal's financial world. The crisis began in the United States, when subprime mortgage defaults started, due to falling house prices and rising interest rates. Because they spread information to investors, the freeze in credit markets, which in turn led to a shortage of liquidity. Bailout by the Government and the financial institutions nationalized. In Finland's financial crisis has hit the export industry is the most severe. As Finland's business partner into a depression, so did trade between the two countries. As a nation, many export-dependent, Finland through greater unemployment

Literature review

The review also revealed gaps in the literature. Changes in unstable environments during the crisis raised the Banks financial reports. This raises a few questions, because it affects the confidence of customers. The document does not address these issues. Therefore, the review submitted to the corporate clients of the Bank will investigate the base.

There are three parts of the literature review. First part, is to discuss the financial report on the impact of regulatory reform. In order to access this discussion, several agencies and study the financial regulatory response to the crisis. Because of the regulatory action is intended to ease the financial environment to promote confidence in the financial markets, it studied, which has found the problem, and is working to improve standards is very important. Second part, establishes the financial reporting the usefulness of and the connection between the financial crisis. Complexity and comprehensibility as well as the reliability and relevance of an important concept discussed here. Fair-value accounting plays a strong role in the debate as to the reliability of impact and relevance has been quite a controversial topic. . In the final part, transparency and disclosure are discussed. This is because, in the literature review of these issues was widely seen as providing possible solutions have surfaced

“It is not a liquidity problem, it is a valuation problem”, Joshua Rosner, managing director at Graham Fisher & Co. In New York said, it is capturing the essence of linking the financial crisis to financial reporting (Ivry (2008)). The valuation of complex financial instruments led to asymmetry of information within the system, the first value at a higher price than the asset is realistic, at a lower price, when the economy experienced a downturn. Falling asset prices cause financial problems for banks and bank liquidity and credit problems led to the failure of other institutions. In addition, the information asymmetry of feed system uncertainty and imbalances and the initial problem. This problem is referred as procyclicality (Catarineu-Rabell, Jackson & Tsomocos (2005)). Investors valued the chaos could not make an informed decision. It's reliability and the related financial statements is consistent, clear assessment they do not give reliable information about decision problems. (Flegm (2008)) that the financial reporting requirements related to them is reliable. Reliability had to make way for his critique of relevance, in particular through the use of fair value accounting. (Barth and Landsman (2010)) discuss the role of financial reporting of banks during the financial crisis. They discussed the financial reporting as fair value, asset securitization, derivatives and