Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments March 31, 2023 erstellt
Description:
The Financial Accounting Standards Board issued the current expected credit loss (CECL) standard, which requires banks to take a forward-looking approach to recognizing life-of-loan losses upon loan origination. Using bank mortgage approval decisions at the ZIP code level and a difference-in-differences research design, we find that CECL-adopting banks experience a decrease in the sensitivity of mortgage approval rates to house price growth after adoption. The effect is stronger when housing supply elasticity is low. ZIP codes with high exposure to CECL-adopting banks also experience a decrease in housing booms. Overall, our findings suggest that CECL adoption reduces bank lending procyclicality