IFRS 9 AND IT´S BEHAVIOUR IN THE CYCLE: THE EVIDENCE ON THE EU COUNTRIES

Oľga Pastiranová and Jiří Witzany

No 3.003, FFA Working Papers from Prague University of Economics and Business

Abstract: The purpose of this paper is to empirically analyse the behaviour of expected loan loss provisions during the economic cycle. Provisioning rules under IFRS 9 require creation of the expected credit losses, which have been anticipated to behave countercyclically, and so replaced the rules under IAS 39 widely presumed to have procyclical impact. Observing the dynamics of the economic cycle during the economic downturn resulting from the COVID restrictions, a panel regression has been performed to test the hypothesis that loan loss provisioning rules under IFRS 9 have procyclical impact. The hypothesis was confirmed within the period of 1Q 2015 - 3Q 2020 on the sample of the member countries of the European Union.

Pages: 13 pages
Date: 2021-04-16, Revised 2021-05-02
New Economics Papers: this item is included in nep-acc, nep-eur and nep-fdg
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