The Implementation of the IFRS 9 in Banking Industry

Jean-François Casta (1) , Christophe Lejard (2) , Eric Paget-Blanc (3, 4)

1 DRM - Dauphine Recherches en Management
2 MRM - Montpellier Research in Management
3 LITEM - Laboratoire en Innovation, Technologies, Economie et Management (EA 7363)
4 UEVE - Université d'Évry-Val-d'Essonne

This study addreses a first post-implementation review of the IFRS 9. Precisely, I focus on short-term effects generated by the standard, i.e. a decline of retained earnings and other equity reserves mainly due to the implementaton of the expected losses-based provisionning model, and how did banks accomodate their accountng policy to mitigate those unfavorable effects. By using a sample of 56 EU publicly listed banks, I found banks have incentive to decrease (increase )their level of discrenationnary loanloss provisions when unfavorable impact on retained earnings is higher (lower), supporting the income smoothing hypothesis. In addition, obtained results do not verify the capital management hypothesis.

Mots clés: Income smoothing; Expected Credit Loss; Capital management

Domaines: Gestion et management

Jean-François Casta, Christophe Lejard, Eric Paget-Blanc. The Implementation of the IFRS 9 in Banking Industry. EUFIN 2019 : The 15th Workshop on European Financial Reporting, Aug 2019, Vienne, Austria. ⟨hal-02405140⟩