IFRS 9 – Implications on Procyclicality

Oľga Pastiranová () and Jiří Witzany
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Oľga Pastiranová: Prague University of Economics and Business

Chapter Chapter 20 in Regulation of Finance and Accounting, 2022, pp 251-260 from Springer

Abstract: Abstract The aim of this study is to analyze the cyclical behavior of loan loss provisions under IFRS 9 provisioning rules as compared to the previous standard IAS 39. Provisioning rules under IAS 39 were considered procyclical, and there has been an appeal to replace the incurred credit loss model with the expected credit loss model, which was assumed to have a countercyclical impact. However, recent development indicates the opposite. The hypothesis that loan loss provisions under IFRS 9 provisioning rules have procyclical effects was empirically tested and confirmed by the panel regression analysis of quarterly GDP growth and impairment ratio on the sample of EU member countries for the period 1Q 2015–3Q 2020.

Keywords: Procyclicality; Loan loss provisions; IFRS 9 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-3-030-99873-8_20

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DOI: 10.1007/978-3-030-99873-8_20

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