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Ifrs 9 And It´S Behaviour In The Cycle: The Evidence On The Eu Countries

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  • Oľga Pastiranová
  • Jiří Witzany

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.

Suggested Citation

  • Oľga Pastiranová & Jiří Witzany, 2021. "Ifrs 9 And It´S Behaviour In The Cycle: The Evidence On The Eu Countries," FFA Working Papers 3.003, Prague University of Economics and Business, revised 02 May 2021.
    • Handle: RePEc:prg:jnlwps:v:3:y:2021:id:3.003
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    References listed on IDEAS

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    6. Buesa, Alejandro & Población García, Francisco Javier & Tarancón, Javier, 2019. "Measuring the procyclicality of impairment accounting regimes: a comparison between IFRS 9 and US GAAP," Working Paper Series 2347, European Central Bank.
    7. International Monetary Fund, 2009. "Policies to Mitigate Procyclicality," IMF Staff Position Notes 2009/009, International Monetary Fund.
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