Resumen:
This paper provides early descriptive evidence on the effect of the adoption of IFRS 9 and COVID19 on banks' lending and regulatory capital. Using a sample of Spanish quoted banks, we find that the implementation of IFRS 9 resulted in an increase in the timeliness of loan loss recognition, and it only had a negative effect on lending for small banks that are timelier in recognizing expected credit losses. Timelier banks, large and small, increased their Tier 1 regulatory capital after the implementation of IFRS 9, although larger banks to a greater extent. Despite the extraordinary economic stimulus measures taken during the COVID-19 shock, there is a reduction in lending for small banks that are timelier in recognizing expected credit losses, and an increase in Tier 1 capital for timelier large banks. These results are not inconsistent with IFRS 9 having some procyclical traits, as it is not possible to anticipate truly unexpected shocks like COVID-19. The fact that IFRS 9 is more forward looking than its predecessor IAS 39, and that the observed effects are mild suggests that IFRS 9 is likely less procyclical than IAS 39.
