Research On The Impact And Countermeasures Of The Application Of Expected Credit Loss Model In Bank C

In order to converge with the International Accounting Standards IFRS 9 and prevent and control financial risks,The China’s Ministry of Finance revised and promulgated Accounting Standards for Business Enterprises No.22-Recognition and Measurement of Financial Instruments in March 2017.The new standards introduces an Expected Credit Loss(ECL)model to reflect the credit risk of financial assets better by considering forward-looking information.The companies listed at home and abroad are required to implement the new standards from 2018.However,the ECL model has not yet undergone a full economic cycle test,the sudden COVID-19 epidemic has hindered the smooth implementation of this model.Therefore,the Ministry of Finance issued “the Notice on Further Implementing the Accounting Standards Related to New Financial Instruments”,stipulating that other companies can postpone the implementation until January 1,2022 at the latest.In this context,it is necessary to strengthen the research on how commercial banks can change from the old model to the new ECL model to estimate the expected loss of financial assets better,and how to measure the asset impairment more objectively and reliably in practice.This dissertation takes the financial assets of banks as the research object,focuses on the evaluation of credit risk and the reflection of credit losses of financial assets,and takes the expected credit loss model as the core.Using the literature research method and case study method,to conducts a specific study on the impact of changes in standards and the application of impairment models on Bank C,an important urban commercial bank in the western financial center of China.The specific impacts include the impact of financial asset reclassification,the impact on financial asset impairment,the impact on credit impairment losses,the impact on relevant credit risk management indicators,and the impact on the quality of accounting information.Through the above research,it is found that there are problems in the practice of applying the expected credit loss model in Bank C,and targeted countermeasures and suggestions are proposed.It is also hoped that it can provide some reference for small and medium-sized banks in the Western region and other banks that have just started implementing the new standards and applying the new model,and improve the continuous application of the new standards and models in China’s commercial banks.Through analysis,it is found that:(1)The expected credit loss model is complex and has a significant impact on application.(2)Credit risk management is difficult to balance.(3)The use of models provides space for profit manipulation.(4)Insufficient supervision of accounting information disclosure.To address these issues,this dissertation proposes the following recommendations:(1)Improve the construction of expected credit loss models,and continue to focus on model optimization.(2)Strengthen the consideration of forward-looking information to ensure the reliability of financial information.(3)Improve the risk management system and strengthen the professional quality of personnel.(4)Improve accounting information disclosure and strengthen earnings management supervision.