Graduation Year

2026

Date of Submission

12-2025

Document Type

Open Access Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics-Accounting

Reader 1

George Batta

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© 2025 Thomas J Walker

Abstract

U.S financial regulations and reporting standards are ever-changing and have a significant impact on how banks classify and oversee their assets. The implementation of ASC 320 in 1993, as well as ASC 820 and ASC 825-10 in 2008, altered the effects of fair value accounting. This study examines factors that drive banks to use the held-to-maturity (HTM) and available-for-sale (AFS) classifications following the implementation of ASC 825-10 during the 2008 Global Financial Crisis. I focus on how banks use the HTM classification to obscure the accurate valuation of their securities by failing to disclose unrealized gains or losses, and on the role funding structures play in a bank's decision to reclassify its securities to HTM. Using OLS regressions, this study finds that a bank's capital strength has a substantial positive impact on HTM classification usage, that overall liquidity has a significant negative effect on HTM classification usage, that a bank's funding fragility does not predict a bank's HTM levels, and that after ASC 825-10, fragile banks increased reclassification activity.

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