Expected credit losses and managerial discretion. Current practices and future challenges

Riccardo Macchioni, Alessandra Allini and Martina Prisco

MANAGEMENT CONTROL, 2021, vol. 2021/3, issue 3, 111-134

Abstract: This paper examines the loan loss provisioning behaviour during the transition from IAS 39 to IFRS 9 for a sample of 403 banks in 27 countries in European Union. The objective of the study is to investigate whether during the first years of adoption of the new expected credit loss (ECL) impairment model banks are more en-couraged to smooth earnings and manage capital, compared to the previous in-curred loss (ICL) model. Results show that under ECL, banks adopt a more ag-gressive opportunistic behaviour in accordance with the income-smoothing and capital management approach. Management should be aware of this to implement monitoring and control systems, increasing trustworthiness of financial in-formation for investors? expectations.

Date: 2021
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.francoangeli.it/riviste/Scheda_Rivista. ... 588&Tipo=ArticoloPDF (text/html)
Single articles can be downloaded buying download credits, for info: https://www.francoangeli.it/DownloadCredit

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fan:macoma:v:html10.3280/maco2021-003006

Ordering information: This journal article can be ordered from
http://www.francoang ... o.aspx?IDRivista=166

Access Statistics for this article

MANAGEMENT CONTROL is currently edited by FrancoAngeli

More articles in MANAGEMENT CONTROL from FrancoAngeli Editore
Bibliographic data for series maintained by Stefania Rosato ().