IFRS 9 transition effect on equity in a post bank recovery environment : the case of Slovenia

Zaman Groff, Maja (author), Mörec, Barbara (author)

On January 1, 2018, IFRS 9 became effective in the EU. It introduced the expected credit loss model to allow for timely recognition of credit losses, estimated not only on the actual credit loss experience but also on forward looking information related to current loan portfolio. Although the transition to IFRS 9 should lead to increased impairments and decrease in banks’ equity, this effect is ambiguous in the settings characterised by combined effects of optimistic macroeconomic outlook and strong regulatory intervention related to extensive loan portfolio restructuring. This paper investigates day-one transition effect of IFRS 9 on level of loan impairments and total equity of banks in Slovenia, Eurozone country, which barely averted international bailout in 2013 by extensive state assisted bank restructuring. The comparative analysis is done on banks that transferred deteriorated loan portfolio to the state’s Bank Assets Management Company and all other banks. In line with expectations we find that banks without extensive asset portfolio improvements recognised additional loan impairments on transition to IFRS 9, whereas the opposite effect is observed for banks which performed state-assisted loan portfolio restructuring. Our study provides additional insight on the effect of institutional and regulatory setting on IFRS 9 implementation effects.

• Language: English
• Keywords: Slovenia, banking, credit, crises
• Work type: Article
• Typology: 1.01 - Original Scientific Article
• Organization: EF - School of Economics and Business
• Publication version: Version of Record
• Year: 2020
• PID: 20.500.12556/RUL-119523
• UDC: 336.71
• ISSN on article: 1331-677X
• DOI: 10.1080/1331677X.2020.1804425
• COBISS.SI-ID: 26182659
• Publication date in RUL: 09.09.2020

Record is a part of a journal

• Title: Ekonomska istraživanja = Economic research
• Publisher: Taylor & Francis, Sveučilište Jurja Dobrile u Puli
• ISSN: 1331-677X
• COBISS.SI-ID: 6796877

Licences

• License: CC BY 4.0, Creative Commons Attribution 4.0 International
• Link: http://creativecommons.org/licenses/by/4.0/
• Description: This is the standard Creative Commons license that gives others maximum freedom to do what they want with the work as long as they credit the author.
• Licensing start date: 09.09.2020

Secondary language

• Language: Slovenian
• Keywords: Slovenija, bančništvo, krediti, krize