The Expected Loss Model In The Application Of Commercial Bank Loan Loss Provision

Loan loss provisions is based on bank loan loss reserve evaluation in extraction,is one of the important measures to resist the risk of loss for bank loans.And it is also a great significance for the stable operation of Banks.Provision for the internal mechanism of loan loss provisions,lead to the pro-cyclical of its own.It means to reduce the reserve during economic upward and increase the provision during the economic downturn.This series of measures suggested that the international community is gradually shifting their supervision idea.The expected loss model obtains more and more attention.The international accounting standards board on financial instruments accounting standards revision work,since our country has been actively participate in the development of relevant standards,domestic experts and scholars also launched a widely discussed.As the trend of keeping up with international standards,the expected loss model will likely be a wide range of applications in our country in the near future.Through the analysis of the reality of loan loss preparation in our country's commercial Banks and the current provision for loan provisioning method,we can obtain the conclusion that our country's commercial bank of loan loss preparation provision has the nature of pro-cyclical.By comparing the research examples we can analyses the pros and cons of expected loss model and the occurred loss model.Then we can put the grey prediction system into expected loss model in order to improve whole system.Finally I hope to establish a dynamic provisioning system for our commercial banks,and provide some advice to improve the monitoring of bank loan loss provisions.