determinants of loan loss provision (LLP), which are classified as either discretionary (income smoothing, capital management …

The loan impairment rules recently introduced by IFRS 9 require banks to estimate their future credit losses by using … not apply IFRS 9 around this cut-off. This pattern is consistent with a strategic use of the increased reporting … discretion that is inherent to rules requiring forward-looking loss estimation. At the same time, banks also reduce their lending …

Banks that follow conditional conservatism in their loan loss accounting treatments benefit from a reduction in crash … risk. The key discretionary loan loss accounting channels are provisions and allowances. We show that conditional … prompting for more conservative bank loan loss accounting does not present a significant opportunity to limit systemic effects …