What has changed in the Icelandic banks?

Ásgeir Brynjar Torfason, Assistant Professor at the Faculty of Business Administration

The aim of the study is to analyse the Icelandic banks' accounting before and after the economic collapse in 2008 to compare it to international banks in light of ongoing changes in regulations in financial markets. “The source of the study is my doctoral thesis on cash flow in Scandinavian banks in Sweden between 2010 and 2014. I wanted to expand that research by taking into account both the Icelandic and the European banking system," says Ásgeir Brynjar Torfason, assistant professor in Business Administration, on his study from 2015. 

Ásgeir Brynjar points out that before the international financial system practically collapsed in 2008 most banks' financial statements looked favourable so the imminent danger was in no way apparent. "After the economic collapse a vast revision has been made on the banks’ regulatory environment and international accounting standards. It is thus vital to study the banks now with real financial information and pending regulation changes," he adds. 

One of the subjects Ásgeir Brynjar intends to study is the impact of indexation in loans on the bottom line of the Icelandic banks, versus the international ones. "It is also intriguing to study the banks before and after the collapse taking the regulation changes into consideration. The pending regulation changes increase the scope of the project and extend the timefame as the study needs to range over several years, seeing how the implementation of some of the new rules is not until 2018," he points out.  

Ásgeir Brynjar has specialised in bank accounting and instability in financial markets, and says it valuable to integrate pragmatic research and advancement of theories. "The economic collapse brought about rethinking of various accepted theories on market efficiency and popular ideas on stability, market-clearing price and the nature of risk taking. It is thus important to do research such as this. There is considerable growth in this field abroad and thus vital to use Icelandic data in this context," he says. It is, furthermore, extremely important for society that financial information reflect the banks’ real balance in order to act upon weaknesses and promote more stability.  

Ásgeir Brynjar considers challenging projects as driving forces and the analysis of accounting and the financial status of the banks is certainly that. "Research activity is extremely important to me. There are vast changes on the international scene in the field of finance and the development of financial markets."