Research On The Impact And Improvement Of Fair Value In Financial Industry

The global financial crisis triggered by the American sub-prime mortgage crisis caused the fair value accounting standards widespreadly concerned and argued by financial and accounting profession, the debate focused on whether fair value adapted to financial market volatility. In order to deal with the problem of the strike on fair value by financial crisis, the international accounting organizations accelerate the pace of the revised Guidelines on how to improve the framework for fair value accounting standards, strengthen market discipline and promote financial industry stability and development.This article reviews the theory of fair value, introduces and summarizes the use case of fair value in financial industry, and then analyses the impact on financial industry by fair value, including the impact on financial statements, financial system volatility, macroeconomic forecast and financial supervision. The paper also studies the strike to fair value by the financial crisis with examples of AIG Corporation, Deutsche Bank and listed companies in China. Associated with the improvement strategies of fair value from the international community, this article poses the countermeasures from four aspects such as re-classification of financial assets, impairment of financial asset, fair value valuation and fair value disclosure to coordinate fair value and development of financial industry. In the aspect of impairment of financial assets, this paper refers to the relevant principles of measuring financial instruments with a new impairment method based on expected losses, which is proposed by IASB, to detailedly contrast expected loss model with existing loss model, and it also illustrates how to use the expected loss model with an example of fixed-rate loans. Especially based on the current fair value measurement model of three levels, this paper proposes new suggestions for improvement. This article sums up the characteristic and unique problems of financial instruments and fair value measurement in China, which is the emerging market economies country, and our efforts for improving fair value are comparatively analyzed with the IASB in order to be accordant with the international accounting standards.This article analyses impact and improvement of fair value in financial Industry with the view of the financial crisis, in order to support the improvement of fair value theoretical framework and provide the guideline for coordinating fair value and development of financial industry.