Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments March 10, 2020 erstellt
Description:
Effective from January 1, 2018, IFRS 9 changed banks' accounting for the impairment of financial assets by replacing the incurred credit loss (ICL) model with the expected credit loss (ECL) model, which enhances the timeliness of accounting for credit losses. Using a sample of international banks from 33 countries, we examine the impact of this shift to the ECL model on loan loss recognition timeliness (LLRT). The results of our difference-in-differences analysis reveal that this shift increases LLRT. We also find that the positive effect on LLRT is more pronounced for riskier banks and banks that recorded lower loan losses prior to the shift. The above findings are consistent with the view that the ECL model allows a larger amount of expected loan losses to be recognized earlier, compared to the ICL model. Overall, our results offer early insight into a revolutionary shift in accounting for credit losses