Research On Loan Loss Provisions In China's Commercial Bank

The provision of loan impairment reserve fund is carried out by commercial banks,with the main purpose of making up the loan loss caused by the default of the borrower.The provision is directly related to whether loan risk can be totally covered,and both overmuch and too little provision will affect the operation of macro economy.The previous provision policy of loan impairment reserve funds implemented in China was based on the calculation of the incurred loss model.However,various problems of the loan impairment of commercial banks under this policy have been gradually exposed in recent years in aspects of recognition,measurement,recording and disclosure,such as the lag in loan impairment recognition,the strong procyclicality and the insufficient withdrawing.This makes experts and scholars from all sectors of society begin to question whether the incurred loss model should be reformed,which has apparently pushed the transformation of the model to the front line.Under this background,China's Ministry of Finance issued new in April 2017,and revised No.22,No.23 and No.24 accounting standards of financial instruments of the Accounting Standards for Business Enterprises(ASBE),which are collectively called Chinese Version IFRS9,namely,the Chinese version of the No.9 International Financial Reporting Standards: Financial Instruments.These standards stipulate that China will gradually implement the expected incurred loss model in January 2018,aiming to solve the problems in the previous standards.Based on the above background causes,this paper studied the loan impairment accounting of commercial banks.The first chapter is the introduction,which approximately introduces the research background,the main research ideas and research methods.The second chapter is the literature review,which reviews and studies literatures in China and abroad.The third chapter presents the research basis of this paper.From two perspectives of risk management and financial theory,this paper expounded the basic theories of loan impairment of commercial banks,and on this basis discussed the development process of system and policies of loan impairment reserves in China from two aspects of current accounting policies and regulatory policies.Further,the problems that should be studied by loan impairment accounting were introduced,and the system of loan impairment provision in China was reviewed.The fourth chapter proposes several problems in China's overall provision of loan impairment reserve fund from aspects of the recognition,measurement,recording,reporting and disclosure of the provision.At the same time,the influence of the implementation of Chinese Version IFRS9 on the provision as well as the defects of the provision was introduced.The fifth chapter makes a profound investigation on the concrete case about Shanghai Pudong Development Bank(SPDB).Using relevant data in three quarters of financial reports from 2012 to 2017 of SPDB,through a large number of diagram and literal expressions,this paper aims to expound several problems in the provision of loan impairment of the bank,for example,the loan impairment reserve caused by impairment model has certain procyclicality,the provision is insufficient and mingled with too many subjective factors of the management layer.Since the Chinese Version IFRS9 has not yet been implemented in SPDB,this paper introduces the possible influence of the implementation of the new standards on the bank,and puts forward specific comments and suggestions from aspects of system and operation.The sixth chapter is based on the above case to put forward suggestions on the provision of loan impairment of China's commercial banks respectively from aspects of external environment and internal environment.It is hoped that these suggestions can effectively help the loan impairment of China's commercial banks to realize the transition of policy transformation,so as to promote stable development of the whole financial system,and to provide investors with more authentic and dependable financial statements.Finally,the shortcomings of the present study are analyzed.