Minsky's financial instability hypothesis, accounting information and the 2007-9 financial crisis in the UK and US

Paul Barnes*

*Corresponding author for this work

Research output: Contribution to journalArticle

3 Citations (Scopus)

Abstract

This paper examines the financial crisis of 2007-9 in the UK and US in terms of the financial instability hypothesis (FIH), a theory of boom, bust and financial crises. It is shown that in a similar way to the crises of 1866 and 1987 (Barnes, 2007) the FIH provides an important depiction of the 2007-9 crisis and how it came about. However, it does not recognize: (1) the role of accounting information and how it may contribute to boom and bust and be used to change perceptions and mislead; and (2) the likelihood of fraud and financial swindles, all features of the 2007-9 crisis.

Original languageEnglish
Pages (from-to)423-437
Number of pages15
JournalAccounting History
Volume16
Issue number4
DOIs
Publication statusPublished - Nov 2011

Keywords

  • big bath accounting
  • crash
  • fair value accounting
  • financial crisis 2007-9
  • fraud
  • informational asymmetry
  • mark to market
  • Minsky

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