Changes In The Model Of The Impairment Of Financial Assets And Banking

U.S. subprime mortgage crisis has finally evolved into the "once in a hundred years" global financial crisis, leading the overall global economic slowdown or even recession, the unemployment rate climbed to a record high, giving rise to positive reflections on different levels. The financial instruments which play a great part in worsening the in the crisis, attracted worldwide attention. As the International Accounting Standards Board (IASB) released "Financial Instruments:Amortised Cost and Impairment" Exposure Draft, the researches on impairment of financial instruments went into a New level.Financial instruments, as a factor of financial system, have a direct effect on the financial system. The accurate measurement and disclosure for financial instruments is directly related to the healthy development of the entire financial system. From the 1960s, the innovations of financial instruments have been springing up continuously. The uniqueness and complexity of financial instruments make more stringent requirements to the quality of accounting information about recognition, measurement and impairment. It has significant theoretical and practical significance to study on Impairment of financial instruments. It will not only help to perfect the development of IFRS 9—the financial instruments principles, promote the full convergence between Chinese Accounting Standards (CAS) and International Accounting Standards (IAS), but also help Chinese enterprises to understand and fully apply the Financial Instruments Principle.Through qualitative analysis and quantitative analysis, this paper analyzed the impairment model of financial instruments, using comparative analysis. Firstly, based on IASB's "Financial Instruments:Amortised Cost and Impairment" Exposure Draft, the paper fully explained the concepts of the impairment of financial instruments, and introduced the features of new model through the comparative analysis between "expected loss model " and "incurred loss model". Secondly, from the banking perspective, through qualitative analysis, the paper studied the impact of application of new impairment model on loss provisions. Finally, the paper brought forward policy recommendations on amendments to standards and the banking application of new model from the application level.This paper includes five parts:Part I:Introduction. It introduced the background, significance, literature review, innovation and weakness of this paper.PartⅡ:The related concepts and development process of the impairment of financial assets. It introduced the relevant concepts and theories, as theoretical guidance of discussion and analysis of the later in this article.PartⅢ:The theoretical basis for model changes. It introduced the theoretical basis of the current impairment model changes in the model, and described the characteristics of the impairment model.PartⅣ:Impairment of financial assets, changes in China's banking industry model of the challenge. Taken the credit assets as an example, it introduced the measurement methods of Expected Loss Model, explained the impact of changes in impairment model of financial assets on loss provision in the background of the actual situation of China's banking industry, and the difficulties and challenges that China's banking industry faced in the application.PartⅤ:policy recommendations on the application of new model. Based on the comprehensive analysis in the above sections, it brought forward recommendations on formulations and amendments to standards and the banking application of the new model.