THE EFFECTS OF FAIR VALUE ACCOUNTING ON THE INFORMATION QUALITY OF BANKS’ FINANCIAL POSITION AND PROFITABILITY IN THE REPUBLIC OF SERBIA
Abstract
The aim of the paper is to examine whether the application of fair value accounting (FVA) impacts the quality of information on the financial position and profitability of banks. The research was conducted on a sample of banks that operated in the Republic of Serbia (RS) in the period between 2010 and 2020. The Paired-Samples t-test and measures of variability of the analysed data were used to test the hypotheses. It has been noticed that the profitability indicators of banks determined under the conditions of application of the full FVA are statistically significantly different from the same indicators determined by the application of historical cost accounting (HCA). No statistically significant difference was found between the profitability indicators of banks determined under the conditions of application of HCA, on the one hand, and those determined under the conditions of application of the mixed-attribute model of measurement, on the other hand, nor was a statistically significant difference between the indicators of the financial position of banks determined by the application of HCA and FVA. The research confirms that the profitability of banks in the Republic of Serbia is more susceptible to changes in times when FVA is applied, than in cases of HCA application.
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DOI: https://doi.org/10.22190/TEME231109058G
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