The actuality of the present article is argued that once with the global financial crisis a serious problem in the process of managing risks in the banking sector appeared. This paper focuses on the main innovative elements introduced by IFRS 9. The key element is represented through the model based on expected credit losses, which replaced the incurred loss model of IAS 39. The model was designed to counteract one of the shortcomings revealed by the financial crisis – risk of impairment losses on loans. The purpose of the article is to familiarize stakeholders with major milestones and concepts related to IFRS 9. In the article the following research methods were used: the logical method of analysis and systemic synthesis, comparative method, classification method, the method of deduction, etc. The paper pointed out the technical details under which banks should consider the significant increase of credit risk. The paper stressed the need for an innovative model which could forecast potential losses from credit risks.
Ovidiu VOICU, PhD Student, National Institute for Economic Research, Romania
IFRS 9, impairment, credit risk expected loss, provision.