Abstract:

Since January 2018 the new standard IFRS 9 Financial Instruments has been in force, which replaced the previously applicable IAS 39. The new standards of IFRS (International Financial Reporting Standards Foundation) specifies how a bank should classify and measure financial assets and liabilities. IFRS 9 significantly influenced the calculation of allowances for expected credit losses for banks. By new standards, loans are distinguished in three stages: stage 1, good credit quality, stage 2 with signs of weakness and increased risk (no default), stage 3 by default POCI (Purchased or Originated Credit Impaired) with reduced value.

The paper is interested on the influence of macroeconomic aggregates to the evolution of loans considering the quality of them. The evolution of loans through the three stages is considered to be influenced by: 1/ the economic situation of the country; 2/ the geopolitical situation of the country; 3/the specific conjuncture of the Covid 19.

Further to the literature research, to demonstrate the validity of the hypotheses, the paper examined the financial statements of the 4 largest banks operating in Greece and Poland.