The Effect of the Current Expected Credit Loss Approach on Banks’ Lending during Stress Periods: Evidence from the COVID-19 Recession Available to Purchase

We benefited from the comments of two anonymous reviewers, Viral Acharya, Yakov Amihud, Sudipta Basu, Sudarshan Jayaraman, April Klein, Linda Myers, Joshua Ronen, Katherine Schipper, Hal Schroeder, David Swanson, Rahul Vashishtha, Larry Wall (discussant), Wei Wang, Joanna Wu, Jason Xiao, Teri Lombardi Yohn (editor), Paul Zarowin, conference participants at the 2023 Federal Reserve Procyclicality Symposium, and seminar participants at The Chinese University of Hong Kong, Shenzhen, Duke University, Lingnan University, New York University, Shanghai University of Finance and Economics, Stony Brook University, SUNY, Temple University, University of Connecticut, University of Illinois Chicago, University of International Business and Economics, University of Rochester, and The University of Tennessee. The authors of this publication have no conflicts of interest related to this research.

An earlier version of this paper circulated under the title “Does the Current Expected Credit Loss Approach Decrease the Procyclicality of Banks’ Lending? Evidence from the COVID-19 Recession.”

Jing Chen, Stevens Institute of Technology, School of Business, Department of Accounting, Hoboken, NJ, USA; Yiwei Dou and Stephen G. Ryan, New York University, Stern School of Business, Department of Accounting, New York, NY, USA; Youli Zou, University of Connecticut, School of Business, Department of Accounting, Stamford, CT, USA.

Editor’s note: Accepted by Teri Lombardi Yohn, under the Senior Editorship of W. Robert Knechel.