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

Author

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  • Oros Olivera Ecaterina

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

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.

Suggested Citation

  • Oros Olivera Ecaterina, 2015. "Expected Credit Losses - IFRS 9 and Basel III moving towards convergence?," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(1), pages 872-876, May.
    • Handle: RePEc:ovi:oviste:v:xv:y:2015:i:1:p:872-876
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    More about this item

    Keywords

    impairment; expected loss; incurred loss; convergence.;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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