BoE paper says loan fair value techniques come with 'health warnings'
May capture factors that do not necessarily have a bearing on banks' resilience, authors note
It is unlikely that any one technique will capture all relevant aspects of valuation across all types of bank loans, according to a new Bank of England financial stability paper, which notes the market value of loans is "seldom observable" and that their nature and diversity has changed markedly over time.
Understanding the fair value of banks' loans by Samuel Knott, Peter Richardson, Katie Rismanchi and Kallol Sen explains loan 'fair value techniques' and compares them to other valuation
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