A Model-Based Approach to Determine the Number of Scenarios and Scenario Probabilities for Loan Loss Provision Calculations Under the Accounting Standards of IFRS 9 and US-GAAP CECL

2020 ◽  
Author(s):  
Oliver Blümke
Keyword(s):  
Accounting Standards ◽  
Loan Loss ◽  
Loan Loss Provision ◽  
Model Based ◽  
Ifrs 9 ◽  
Us Gaap

scholarly journals PRUDENTIAL REGULATORY REGIMES, ACCOUNTING STANDARDS, AND EARNINGS MANAGEMENT IN THE BANKING INDUSTRY

2019 ◽  
Vol 21 (3) ◽  
pp. 367-394 ◽  
Author(s):  
Ali Ashraf ◽  
M. Kabir Hassan ◽  
Kyle J. Putnam ◽  
Arja Turunen-Red
Keyword(s):  
Earnings Management ◽  
Banking Industry ◽  
Accounting Standards ◽  
Income Smoothing ◽  
Loan Loss ◽  
Accounting Standard ◽  
Loan Loss Provision ◽  
Dynamic Provisioning ◽  
Regulatory Regimes

We analyze if a change in accounting standard or a change in prudential regulationimpacts banks’ loan loss provision. We find that, in general, the banks using aprinciples-based accounting standard exhibit a lower level of earnings managementcompared to banks using a rules-based accounting standard. When a country movesfrom pro-cyclical macro-prudential regulations to a dynamic provisioning regime,banks are more likely to set aside a larger amount of loan loss provision for the purposeof income smoothing.

scholarly journals إنعكاس تطبيق متطلبات IFRS 9 في المحاسبة عن إنخفاض قيمة القروض المصرفية على إدارة الأرباح في المصارف العراقية

2018 ◽  
Vol 24 (107) ◽  
pp. 630
Author(s):  
بشرى نجم عبد الله ◽  
احمد جاسم عبد محمد
Keyword(s):  
Loan Loss ◽  
Loan Loss Provision ◽  
Ifrs 9

يعرف المفهوم العام لإنخفاض قيمة الموجودات المالية على وفق معيار الإبلاغ المالي الدولي IFRS 9 (الأدوات المالية) على أنه الفرق بين القيمة الحالية للتدفق النقدي التعاقدي المستحق للوحدة الاقتصادية بناءاً على العقد وبين التدفق النقدي الذي تتوقع أن تستلمه الوحدة الاقتصادية، وعلى الوحدة تقدير كل التدفقات النقدية من خلال النظر لشروط عقد القروض المصرفية طول فترة عمرها أو لفترة أقل إذا كان ممكناً، على أن تتتضمن التدفقات النقدية مبالغ بيع الضمانات المأخوذة أو أية تعزيزات إئتمانية أخرى، وتختلف اللائحة الإرشادية الصادرة عن البنك المركزي العراقي في المحاسبة عن إنخفاض القيمة من حيث عدم الأخذ في الحسبان الضمانات العينية المتمثلة بالعقارات المقدمة من الزبائن، الأمر الذي قد يؤثر في صافي الدخل المحاسبي نتيجة الإعتراف بخسائر مبالغ فيها وتعد في ذات الوقت مؤشراً لإدارة الأرباح . وعليه يهدف البحث إلى عرض وتحليل متطلبات معيار الإبلاغ المالي الدولي IFRS 9 (المالية) بشأن إنخفاض القيمة، فضلاً عن تطبيق تلك المتطلبات وبيان إنعكاسها على إدارة الأرباح  في عينة من المصارف المدرجة في سوق العراق للأوراق المالية بإستخدام نموذج مخصص خسائر القروض Loan loss provision. وقد توصل البحث إلى مجموعة من الإستنتاجات أهمها إنخفاض ممارسة إدارة الأرباح للمصارف المدرجة في سوق العراق للأوراق المالية بعد تطبيق متطلبات المعيار المذكور في المحاسبة عن إنخفاض قيمة القروض المصرفية. كما قدم البحث مجموعة من التوصيات تمثلت أهمها في حث المسؤولين في البنك المركزي العراقي ومن بينهم من يقوم بإعداد القوانين والتعليمات واللوائح الإرشادية بضرورة تكييف اللائحة الإرشادية المعمول بها حالياً لتتوافق مع متطلبات معيار الإبلاغ المالي الدولي IFRS 9 (المالية) وبما ينسجم مع حاجة البيئة العراقية لتلك المعايير، فضلاً عن توفير المتطلبات اللازمة لذلك.

scholarly journals Regulatory Arbitrage in the Intersection of Accounting Standards and Tax Laws: The Case of Synthetic Leases

2020 ◽  
Vol 0 (0) ◽  
Author(s):  
Jan Friedrich
Keyword(s):  
Financial Reporting ◽  
Balance Sheet ◽  
Accounting Standards ◽  
Regulatory Arbitrage ◽  
Regulatory Changes ◽  
Tax Laws ◽  
The Usa ◽  
Tax Benefits ◽  
Sophisticated Instrument ◽  
Us Gaap

AbstractThis paper focuses on the interplay between accounting standards and tax laws in the context of regulatory arbitrage by examining the development of synthetic leases especially in the USA. In a synthetic lease, the lease remains off balance sheet for financial reporting by the lessee, while depreciations and interest expenses can be deducted for tax purposes. Exploring the evolving structures of synthetic leases over the last 30 years, the paper demonstrates how financial engineers have been able to perpetually re-structure this sophisticated instrument to keep it off-balance sheet instrument notwithstanding regulatory changes. Specifically, it shows that the most recent revision of lease accounting standards in 2016 – that intended to mark the end of off-balance sheet leases under IFRS and US-GAAP – resulted in reviving the demand for synthetic leases as the tax benefits outweigh the structuring costs. Contributing to the debate on the shift towards international accounting convergence (including US-GAAP and IFRS), the paper argues that attempts to limit regulatory arbitrage may also consider the reciprocal linkages between accounting standards and tax laws. For instance, tax laws should be considered as a means to limit regulatory arbitrage in financial reporting.

CREDIT RISK AND COMMERCIAL BANKS’ PERFORMANCE IN NIGERIA: A PANEL MODEL APPROACH

2012 ◽  
Vol 02 (02) ◽  
pp. 31-38 ◽  
Author(s):  
KOLAPO T. Funso ◽  
AYENI R. Kolade ◽  
OKE M. Ojo
Keyword(s):  
Credit Risk ◽  
Commercial Banks ◽  
Commercial Banking ◽  
Loan Loss ◽  
Return On Assets ◽  
Cross Sectional ◽  
Loan Loss Provision ◽  
Panel Model ◽  
Percent Increase ◽  
Credit Analysis

The study carried out an empirical investigation into the quantitative effect of credit risk on the performance of commercial banks in Nigeria over the period of 11 years (2000-2010). Five commercial banking firms were selected on a cross sectional basis for eleven years. The traditional profit theory was employed to formulate profit, measured by Return on Asset (ROA), as a function of the ratio of Non-performing loan to loan & Advances (NPL/LA), ratio of Total loan & Advances to Total deposit (LA/TD) and the ratio of loan loss provision to classified loans (LLP/CL) as measures of credit risk. Panel model analysis was used to estimate the determinants of the profit function. The results showed that the effect of credit risk on bank performance measured by the Return on Assets of banks is cross-sectional invariant. That is the effect is similar across banks in Nigeria, though the degree to which individual banks are affected is not captured by the method of analysis employed in the study. A 100 percent increase in non-performing loan reduces profitability (ROA) by about 6.2 percent, a 100 percent increase in loan loss provision also reduces profitability by about 0.65percent while a 100 percent increase in total loan and advances increase profitability by about 9.6 percent. Based on our findings, it is recommended that banks in Nigeria should enhance their capacity in credit analysis and loan administration while the regulatory authority should pay more attention to banks’ compliance to relevant provisions of the Bank and other Financial Institutions Act (1999) and prudential guidelines.

Accounting Standards and Earnings Quality — Evidence from Registered ADRs

2018 ◽  
Vol 21 (04) ◽  
pp. 1850022
Author(s):  
Yaseen S. Alhaj-Yaseen ◽  
Kean Wu ◽  
Leslie B. Fletcher
Keyword(s):  
Financial Reporting ◽  
Earnings Quality ◽  
Accounting Standards ◽  
Securities And Exchange Commission ◽  
High Quality ◽  
Reporting Standard ◽  
International Financial Reporting Standard ◽  
The Us ◽  
Us Gaap

This paper examines the changes in earnings quality of registered American Depositary Receipts (ADRs) as a result of switching accounting standards. We aim to shed light on the potential impact of International Financial Reporting Standard (IFRS) adoption on US firms. A suboptimal approach to achieve this goal is through examination of US firms’ surrogates such as ADRs. Unlike previous studies, we made a distinction between registered and unregistered ADRs and affirmed that registered ADRs are the closest surrogates with which to conduct our analysis because they are exclusively required to adhere to the Securities and Exchange Commission (SEC)’s stringent disclosure requirements. When cross-listing their equity on the US exchanges, foreign issuers can file their financial reports with the SEC using IFRS, US GAAP (generally accepted accounting principles), or their domestic GAAP with reconciliation to US GAAP. An improvement in earnings quality is documented when ADRs adopt US GAAP or IFRS versus domestic GAAP. However, when the comparison is made between US GAAP and IFRS, no difference in earnings quality is documented. These results indicate that switching to high-quality accounting standards is likely to improve earnings quality. This improvement is maximized when the difference between reporting standards is high and minimized if otherwise. Our conclusion is that the adoption of IFRS in the US is unlikely to change earnings quality of local issuers. Moreover, we drew a distinction between reconciliation with and adoption of high-quality accountings standards and find that while the former can enhance earnings quality, the latter can further improve it.

scholarly journals Characteristics of banks as determinants of profit management for Islamic and conventional banks in ASEAN

Accounting ◽  
2021 ◽  
pp. 1179-1188 ◽  
Author(s):  
Suripto Suripto ◽  
Supriyanto Supriyanto
Keyword(s):  
Discriminant Analysis ◽  
Earnings Management ◽  
Capital Adequacy ◽  
Multiple Discriminant Analysis ◽  
Loan Loss ◽  
Loan Loss Provision ◽  
Brunei Darussalam ◽  
Capital Adequacy Ratio ◽  
Asean Countries ◽  
Conventional Banks

This study aims to analyze company characteristics as a determinant of conventional and Islamic bank earnings management in several ASEAN countries (Association of South East Asian Nations). The Multiple Discriminant Analysis was applied to determine the differences between Islamic and Conventional Banks. This test was conducted based on Capital Adequacy Ratio, Income Before Tax and Interest, Non-Performing and Changing Loans, and Company's Size in the banks of Indonesia, Malaysia, and Brunei Darussalam from 2014 to 2018. The data obtained from 200 banking entities were analyzed discriminatively. The results showed that there were simultaneous differences between Capital Adequacy Ratio, Earnings Before Tax, Loan Loss Provision, Non-Performing and Changing Loans, and Company's Size as determinants of earnings management between Islamic and conventional banks. Also, it was found that Company's Size was the dominant variable determining the management differences. Based on Discriminant Analysis, there were significant differences in the determinants of conventional and Islamic earnings management. The Changing Loan variable showed the highest contribution in determining earnings management in Islamic banks. Overall, this study found that conventional banks dominated Islamic system in practicing earnings management.

scholarly journals Business efficiency of the commercial banks in ASEAN

2016 ◽  
Vol 13 (1) ◽  
pp. 67-76 ◽  
Author(s):  
Abdul Mongid
Keyword(s):  
The Philippines ◽  
Capital Adequacy ◽  
Loan Loss ◽  
Loan Loss Provision ◽  
Business Efficiency ◽  
Personnel Expenses ◽  
Cost Inefficiency ◽  
Asean Countries ◽  
The Cost ◽  
Asset Size

This study examines the determinants of cost inefficiency of banks operating in 8 member countries of the Association of Southeast Asian Nations (ASEAN): Indonesia, Malaysia, Singapore, Thailand, the Philippines, Cambodia, Brunei and Vietnam. The author defines the cost inefficiency using accounting based efficiency known as business efficiency (CIR). Second, the researcher regresses the cost inefficiency ration on a set of bank specific variables (size, equity to total asset, personnel expenses to total expenses) and economic variables (economic growth and inflation rate) using ordinary least squared (OLS) regression analysis. The dataset of 504 banks in the ASEAN countries is used for the period from 2008 to 2012. The results show that the average cost inefficiency ratio during the period is about 59%. Banks from Vietnam exhibit the lowest cost inefficiency relative to banks in the other ASEAN countries. It is found that cost inefficiency is positively determined by inflation, loan loss provision, personnel expenses, capital adequacy and negatively by asset size and liquidity position

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