Research On Loan Loss Provision Accounting Policy Of Post-crisis Era

Loan loss provision not only affects the transparency of accounting information, but also has effect onsound banking operations. Loan loss provision has always been the international puzzle that accountingstandards settingauthorities, bank regulators and banks face. With the outbreak of the2008financial crisis,the domestic and international parties have paid more and more attention to the problem, starting tore-examine, explore and solve the puzzle.After the crisis, the current incurred loss model, which is pro-cyclical and lack of forward-looking view,is being questioned. Under the combined effect of various pressures, the world’s most authoritativeaccounting standard setters IASB reformed the loan loss provision accounting policy, proposing the"expected loss model" which had taken the expected credit losses into consideration, and subsequentlycontinuing to make improvements to the model. The incurred loss model which was conducted in domesticcountries also faced the same problem. After the crisis, on the basis of advanced international practices,China have made a useful exploration and practice on loan loss provision accounting policies,implementing the dynamic provisioning regime.In view of these, we use standardized methods to research the reform and development, current status andproblem of loans loss provision accounting policies at home and abroad after the crisis. Specifically, thepaper reviews the IASB post-crisis reform development in loan loss provision accounting policy, and makesa detailed and comprehensive analysis of the institutional background, main content, evaluation andfeedback and the enlightenment which brings to our country of the three exposure draft, which will help tocomprehensively grasp the trends of the international policy and learn from advanced international practices.After the crisis, in the impact of the trend that IASB reform the provision accounting policy, Chinaestablished a forward-looking dynamic provisioning system. On the basis of analyzing thedevelopment process of loan loss provision, the thesis uses data of16listed banks in the2008-2012,inorder to study the effect of policy implementation, the practical features of loan loss provision and existingproblems. Finally, this paper presents related recommendations to improve the loan provision accountingpolicies, in order to provide a useful reference for policy makers.