Liquidity management of Islamic banks and conventional banks: evidence from IFRS 9

Chowdhury Saima Ferdous and Muhammad Shahin Miah

Asian Journal of Accounting Research, 2025, vol. 11, issue 1, 78-94

Abstract: PurposeThis study investigates if the implementation of International Financial Reporting Standard (IFRS)-9: Financial Instruments (IFRS 9 hereafter) affects a firm’s cash holdings from a developing country perspective. Moreover, we explore whether the above nexus varies between Islamic banks and conventional banks in the same setting.Design/methodology/approachThis study covers all the listed banks in Bangladesh. The data period is 2015–2022, which allows the study to have a pre- and post-IFRS 9 impact on corporate cash holdings. We use ordinary least square regression models to test our conjectures. Our entire analysis is based on 232 firm-year observations.FindingsThe overall findings suggest that the cash holding decreased significantly in post-IFRS 9 periods compared to pre-IFRS 9 periods. We further test whether the impact of IFRS 9 presents heterogeneity between Islamic banks and conventional banks in terms of cash holdings. However, we do not find any variation. Our results remain robust through a set of alternative measures of cash holding and sub-sample analysis.Originality/valueOur study presents an empirical analysis of IFRS 9 in general, and in a developing country Bangladesh in particular. Prior research overlooked the possible impact of IFRS 9 from a developing country perspective, hence, this paper contributes to policy development and the literature of IFRS in emerging countries.

Keywords: IFRS 9; Cash holdings; Islamic banking; Conventional banks; Developing country; Financial instruments (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eme:ajarpp:ajar-10-2024-0453

DOI: 10.1108/AJAR-10-2024-0453

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