The Significance of Transaction Costs in the Measurement of Balance Credit Liabilities

Abstract

In the last years, the banking sector has experienced a number of significant changes in terms of liabilities measurement from credits, loans and securities emission, because of their positions in bank assets. The new regulation in financial accounting, which has been in practice since 2005, introduce an amortized cost method at effective interest rate to the measurement of credits and others. The following paper is devoted to the problem of including transaction costs into the credit measurement. The paper particularly points out the influence of transaction costs clearance on the bank’s final activity results. Transaction costs constitute a very important and not entirely explored area of economics. Their existence could be attributed to imperfect information as well as limited human cognitive abilities and human error. Transaction costs occur on the market level (friction of market forces) and in the business as managerial costs.