The implicit assumption here is that bank balance sheets are strong and in a position to step-up quickly the supply of credit in response to lower funding cost and higher demand for credit – the bank lending or the credit channel of transmission.
However, the Sarbanes-Oxley Act includes a directive that U.S. accounting standards should seek convergence internationally. In view of this, the FASB and the IASB announced in October 2002 a major agreement to intensify their projects that seek international convergence and harmonization of accounting standards.