Temporal Inefficiencies in Risk Recognition: A Causal Analysis of Risk Perception Lag in Global Banking Systems

This paper develops a theoretical and empirical framework to measure Risk Percep- tion Lag (RPL), the temporal distance between the objective realization of an eco- nomic shock and its subsequent incorporation into internal bank risk measurement and provisioning systems. Utilizing a comprehensive global panel of 320 commer- cial banks from 2011 to 2024, I decompose RPL into three structural dimensions: informational frictions, model inertia, and institutional delay. Methodologically, the study employs a two-step System GMM estimator to address the dynamic persistence and endogeneity inherent in risk recognition, alongside a Difference- in-Differences (DiD) design centered on the mandatory adoption of IFRS 9 and CECL. The results indicate that while the transition to forward-looking accounting has reduced average lag, structural inefficiencies, particularly rigid model recali- bration cycles and governance complexity, continue to drive significant temporal gaps. Furthermore, I find evidence of an asymmetric ”stigma effect” and for- bearance incentives: banks are quick to recognize severe credit deteriorations to signal ”kitchen-sinking” but delay the recognition of marginal deteriorations to prevent capital depletion. These findings provide critical insights for macropruden- tial surveillance, the calibration of countercyclical capital buffers, and the ongoing refinement of Basel IV and IFRS 9 frameworks.