IFRS 9 IMPACT ON BANK LANDING POLICY AND STRUCTURAL RISK MANAGEMENT

Roberto Ercegovac ()
Additional contact information
Roberto Ercegovac: University of Split, Croatia

Eurasian Journal of Business and Management, 2018, vol. 6, issue 3, 53-60

Abstract: International Financial Reporting Standard 9 (IFRS 9) introduced new principles of classification and measurement of financial instruments, financial assets impairment management, and hedging accounting. In initial recognition and accounting classification of financial assets in amortized costs category, fair value through other comprehensive income, or fair value through profit or loss, IFRS 9 implemented new solely payments of principal and interest (SPPI) test and related benchmark test. Bank landing policy has to take in consideration the IFRS 9 principles of initial recognition of loan contract. In case that the loan contract has terms that give cash flows like solely payments of principal and interest, than the financial assets is consistent with the base landing agreement and can be measured by amortized costs. Otherwise, the loan has to be fair valued with influence on bank structural risk position. Bank landing policy has to be adjusted with banking book management to avoid structural risk hedging costs. If contractual cash flows are not solely payments of principal and interest it is necessary to make a business model test. Business lines in banking firm have to be introduced to IFRS 9 request in product supply definition that is in compliance with bank risk policy.

Keywords: IFRS9; Financial Assets; Fair Value; Lending Policy; Structural Risk (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://eurasianpublications.com/wp-content/uploads/2021/02/EJBM-6.3.6.pdf (text/html)

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:ejn:ejbmjr:v:6:y:2018:i:3:p:53-60

Access Statistics for this article

Eurasian Journal of Business and Management is currently edited by Nidžara Osmanagić-Bedenik

More articles in Eurasian Journal of Business and Management from Eurasian Publications
Bibliographic data for series maintained by Esra Barakli ().