The Effect of the Current Expected Credit Loss Model on Conditional Conservatism of Banks and Its Spillover Effect on Borrower Conservatism
研究了CECL模型下银行在贷款损失上增加保守主义但其他收益部分降低保守主义，导致整体保守主义仅小幅上升，而借款人保守主义大幅增加40%，表明该模型可能通过强化债务治理产生广泛经济影响。
ABSTRACT Under the Current Expected Credit Loss (CECL) model, banks should fully recognize expected lifetime credit losses upon loan origination while gradually recognizing interest revenues. This timelier recognition of losses versus gains (i.e., conditional conservatism) makes banks more capital constrained. To mitigate this, banks may (1) offset timelier credit losses by lowering conservatism in other earnings components and (2) reduce credit losses by demanding greater borrower conservatism. We find that, under CECL, banks increase conservatism in loan losses but decrease conservatism in other earnings components, making overall conservatism only marginally increase. In sharp contrast, their borrowers increase conservatism by 40 percent, and borrowers’ increase is twice that of banks. This substantial spillover effect suggests that, by greatly increasing borrowers’ conservatism, CECL may strengthen debt governance of a broad scope of firms in the economy, thereby having economy-wide consequences beyond the banking industry and potentially enhancing the stability of the entire economy. Data Availability: Data are publicly available from the sources identified in the study. JEL Classifications: G21; M41; M48.