Research On Application Optimization Of Expected Credit Loss Model Of H Financial Leasing Company

To solve the problems of hysteresis and pro-cyclicality exposed by the method of incurred losses in the financial asset impairment during the global financial crisis in2008,The International Accounting Standards Board(IASB)issued International Financial Reporting Standards No.9--Financial Instruments in July 2014,,which requires enterprises to adopt the expected credit loss method instead of the incurred loss method when measuring the impairment of financial assets under the new standard.In order to achieve convergence with international accounting standards,in March 2017,the Ministry of Finance of China revised and issued Accounting Standards for Business Enterprises No.22--Recognition and Measurement of Financial Instruments(hereinafter referred to as the New Financial Instruments Standards).The new financial instruments standard has made a big adjustment to the original accounting,especially the measurement of impairment provisions,therefore it is called the most difficult accounting standard for implementing.The New Financial Instruments Standards requires unlisted companies to implement in 2021.Due to the complexity and professionalism of the theory of the anticipated credit loss method in the new financial instruments standard,the change of impairment measurement model and method has a significant impact on the impairment management of financial institutions.H Financial Leasing Co.,Ltd.is a medium-sized financial leasing company mainly engaged in financial leasing.On January 1,2021,it adopted the expected credit loss model for the first time to measure impairment of financial leasing assets.Due to the short period of time for Chinese financial institutions to implement the new financial instruments standards,and the few practical experience and referential cases of the industry,H Financial Leasing Company,as a non-bank financial institution,has great problems in the first application process,which restricts the application and implementation effect of the expected credit loss model.Based on the theory of expected credit loss method and model building method,this paper optimizes the problems existing in the application process of the expected credit loss model of H Financial Leasing Company.First of all,through constructing the expected credit loss model,combing out model measurement logic and interviewing professionals,then compare the model with the incurred loss model,comparatively analyse the information on expected credit loss models applied by the same trade financial leasing company,we concluded that there are some key problems in the application process of the model,such as difficulty in stage division、manual processing difficultly due to the large number of parameters 、 total amount of impairment reserves measured fluctuates greatly and poor results of the comparability of model application.Secondly,through analyzing the root causes and causes of the problems one by one,we find that the application process of the model can be further improved by improving credit risk identification and evaluation management,strengthening data accumulation and application system constructiont,optimizing quota and pricing management and Institutionaling model application adjustment evaluation.Finally,according to the optimization plan,the application of expected credit loss is comprehensively optimized from the four aspects of strengthening organizational leadership,increasing resource investment,improving risk control and cultivating professional talents,H Financial Leasing Company’s ability and level of asset impairment management for financial leasing are further improved.The conclusion of the paper shows that the optimization of the application of the expected credit loss model can make H Financial Leasing Company’s impairment management of financial leasing assets more elaborate,and to a certain extent,it also make the measurement efficiency of impairment provision of financial leasing assets higher,risk identification and full measurement of impairment more coordinated and unified,and the financial operation results more stable.At the same time,it is conducive to the development and improvement of H Financial Leasing Company’s risk management ability,fintech construction ability and internal governance ability in financial leasing assets.In the long run,it will also help the strategic transformation of H Financial Leasing Company to achieve high-quality sustainable development in the new situation,new challenges and new opportunities.