The Analysis Of Loan Depreciation Reserves Based On Expected Loss

Loan depreciation reserves,commercial banks is extracted, is used to cover the defaulted loan, reflects expected loss of loan or average loss. Loan depreciation reserves in relation to the loans can be accurately cover whether or not, accrued over will affect the efficiency of bank’s capital, insufficient provision will lead to bank capital is eroded, also will affect the stable operation of the macro economy. Therefore, it is important to choose the design and method of depreciation reserves for loan. Therefore, the method of depreciation reserves of the commercial bank is the research’s main content. The purpose is to further improve the China’s loan depreciation reserves method, and improve the procyclicality problems existed in the current method.This paper studies the commercial bank loan depreciation reserves method based onthe Basel capital agreement expected loss, through the comparison and analysis of occurred loss model, the expected loss model under the international accounting standards and the Spanish dynamic preparation system, demonstrates the feasibility and practical significance of Basel capital agreement expected loss method, and think that the Basel capital agreement expected loss method is the development direction of the future of banking supervision in china. In addition, this paper use the A commercial bank’s actual operation data and research results to calculate the depreciation reserves of loans based on the Basel expected loss method, and analysis the reserves results of two methods. Through the analysis of A commercial bank puts forward corresponding suggestions on application the expected loss method and concludes that although A commercial banks can’tmake the expected loss method immediately replace the existing methods of provision for loan, but it can be gradually combined the expected loss method and the current method, and then gradually realize the transition to the expected loss method.