Expected Credit Losses - IFRS 9 and Basel III moving towards convergence?

Oros Olivera Ecaterina ()
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Oros Olivera Ecaterina: Valahia University of Targoviste, Faculty of Economics, 35 Lt. Stancu Ion Str., 130105, Targoviste, Romania

Ovidius University Annals, Economic Sciences Series, 2015, vol. XV, issue 1, 872-876

Abstract: Analysing the loan loss provisioning systems, the incurred loss model of impairment has been identified to be a pro- cyclical one, with potential effects both on amplifying the credit business cycles, and also on earning management. The model based on expected losses, promoted by the Basel regulations proves to be more suitable in recognizing the losses during time and smoothing both the credit cycle, and the earnings management. As a response to these evidences, IASB has issued IFRS 9 with the main scope of shifting the accounting provision concept from incurred loss to expected loss. The aim of the paper is to disclose the main interferences and alignment of the expected loss concept between the Basel regulation and IFRS 9, as a big step towards a convergence of the two.

Keywords: impairment; expected loss; incurred loss; convergence. (search for similar items in EconPapers)
JEL-codes: G28 M41 M48 (search for similar items in EconPapers)
Date: 2015
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