1Accounting Department, Central Bank of Brazil, Brasília, Brazil
2Accounting Department, University of Brasilia, Brasília, Brazil
3Leicester Castle Business School, De Montfort University, United Kingdom
4Department of Management, University of Brasilia, Brasília, Brazil
Journal of Finance and Accounting.
2022,
Vol. 10 No. 1, 49-59
DOI: 10.12691/jfa-10-1-7
Copyright © 2022 Science and Education PublishingCite this paper: Manuela Rodrigues Boscia, José Alves Dantas, Vitor Leone, Herbert Kimura. Expected Credit Losses and Regulatory Capital: Effects of IFRS 9 in European Banks.
Journal of Finance and Accounting. 2022; 10(1):49-59. doi: 10.12691/jfa-10-1-7.
Correspondence to: José Alves Dantas, Accounting Department, University of Brasilia, Brasília, Brazil. Email:
josealvesdantas@unb.brAbstract
The purpose of this study was to determine the effects of adopting the ECL model on the regulatory capital of European banks, especially whether the post-IFRS 9 capital behaviour pattern suggests evidence of underestimated or excessive regulatory capital requirements in the pre-IFRS 9 period. The results of the empirical tests carried out using five different metrics, confirmed that, besides a significant capital buffers’ reduction when the IFRS 9 was first adopted, there was, mostly likely, a regulatory capital underestimation in the period prior to the adoption of the ECL model, since there is evidence that efforts of capital recompositing were taken by the European banks after the implementation of the new accounting standard.
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