Abstract

As part of the Asset Quality Review conducted by the ecb since 2014 with reference to the main European banks, indicators typically used in corporate finance have been introduced. The element that unites the new guidelines appears to be the progressive abandonment of a backward-looking logic to embrace a fully forward-looking perspective based on the appreciation of cash flows. In the aqr framework, ebitda and dscr have assumed particular importance. As is known, the «aqr manual», with specific reference to the calculation of prudential provisioning, provides that banks, in a going concern perspective, estimate the recoverable amount of loans by appropriately discounting the cash flows. The aim of the work is to analyse the prudential provisioning model identified in the aqr framework in order to propose a generalization starting from the expected dscr of the borrower. The paper highlights how an «economic» approach to provisioning tends to reward companies capable of generating adequate prospective cash flows, in this way mitigating the potential allocative distortions implicit in the incentive structure underlying the aqr approach.