Gauging the CECL effect on consumer credit loans
Current expected credit loss (CECL) is an accounting standard introduced to mitigate banks’ potential losses. But some financial industry professionals believe that implementing this model could raise interest rates and reduce credit access to consumer loans. In light of these claims, we look at a study that assesses the CECL’s effects on credit access and pricing.
In this Literature Review, we discuss a 2023 research paper titled ‘Current Expected Credit Losses and Consumer Loans‘, co-authored by Joao Granja and Fabian Nagel. The paper was published by SSRN.