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Calculation of IFRS9 Expected Credit Losses with Discounted Cash Flows
18 June 2018 | Written by 4most
< 1 minute read
IFRS 9 Expected Credit Losses (ECL) are commonly calculated as the sum of the marginal future expected losses in each period following the reporting date, using PD, LGD and EAD components. ECL can also be calculated directly from expected future cash flows. This could be an attractive option for many short-term lenders, especially for those that cannot leverage existing PD, LGD and EAD models, as it requires developing a single cash flow model. Read the full article PDF.
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