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Cited by 39Banking stability, regulation, efficiencyAuditing, Earnings Management, GovernanceCredit Risk and Financial Regulations

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Expected Losses, Unexpected Costs? Evidence from SME Credit Access under IFRS 9

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Ertan, Aytekin·2025·The Accounting Review
DOI 10.2308/tar-2022-0301
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Abstract

This paper examines lending effects of European banks switching to an expected credit loss (ECL) model under IFRS 9. I find evidence that ECL transition deteriorates the credit landscape for SMEs—as risky, opaque, and bank-dependent borrowers. Post-ECL, affected banks reduced SME lending by over 10 percent, and these effects persisted during the most recent downturn during the COVID-19 pandemic. Banks’ financial reporting objectives and implementation difficulties seem to explain these findings. Additional tests at the borrower and loan-contract levels indicate rising loan rejection rates, interest spreads, and collateral requirements, as well as declining loan amounts, maturities, and subsequent capital investments, for SMEs that do business with affected banks. JEL Classifications: G21; G28; G38; M41.

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Metadata

Authors
Ertan, A.
Affiliations
London Business School (GB)
Corresponding author
Ertan, Aytekin
ORCID
Ertan, Aytekin
Venue
The Accounting Review
Publisher
American Accounting Association
Published
2025-05-27
Volume
100
Issue
4
Pages
443-473
ISSN
  • 0001-4826 (ISSN-L)
  • 1558-7967
DOI
10.2308/tar-2022-0301
OpenAlex
W4410120772
Cited by
39
References
3
Citations by year
2026: 12 · 2025: 9
FWCI
2.41
Type
journal article
Language
en
Open access
Locations
  • The Accounting Review (publishedVersion)
  • SSRN Electronic Journal (publishedVersion)
  • London Business School Research Online (London Business School) (acceptedVersion)
Topics
  • Social Sciences › Economics, Econometrics and Finance › Finance › Banking stability, regulation, efficiency
  • Social Sciences › Business, Management and Accounting › Accounting › Auditing, Earnings Management, Governance
  • Social Sciences › Economics, Econometrics and Finance › Finance › Credit Risk and Financial Regulations
Keywords
IFRS 9, expected credit loss model, small business lending, bank credit access, credit risk accounting, COVID-19 pandemic, interest rate spreads, collateral requirements, bank financial reporting, accounting standards transition

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Ertan, A. (2025). Expected Losses, Unexpected Costs? Evidence from SME Credit Access under IFRS 9. The Accounting Review. https://doi.org/10.2308/tar-2022-0301