 Theoretical Impact of IFRS 9 on Banking Performance: A Literature Review and Conceptual FrameworkZineb Khaless
Post-Print from HAL Abstract: This paper presents an in-depth theoretical analysis of the impact of International Financial Reporting Standard 9 (IFRS 9) on banking performance, focusing on its significant transition from the incurred loss model under IAS 39 to the forward-looking Expected Credit Loss (ECL) framework. IFRS 9 requires financial institutions to estimate potential credit losses at the time of loan origination, promoting a proactive approach to risk management and significantly enhancing financial stability and transparency. The study leverages insights from agency theory and financial transparency principles to explore IFRS 9's influence on critical banking performance indicators, including credit risk, profitability, and financial stability. The analysis delves into key variables such as Probability of Default (PD), Loss Given Default (LGD), and Exposure at Default (EAD), elucidating their pivotal roles in shaping contemporary risk management strategies and overall banking outcomes. By examining the interconnected nature of these variables, the paper provides a nuanced understanding of the practical and theoretical implications of IFRS 9. Additionally, this research identifies notable gaps in the existing literature, particularly in the integration of macroeconomic factors and the development of holistic risk assessment models that incorporate IFRS 9's key components. To address these gaps, the study proposes robust theoretical frameworks and emphasizes the need for future empirical research to validate and refine these models. The paper also addresses the complexities and operational challenges faced by financial institutions in implementing IFRS 9, such as the increased volatility on loan loss allowances, model development intricacies, and regulatory capital requirements. It offers actionable insights for policymakers, regulators, and practitioners to navigate these challenges effectively. By offering a comprehensive foundation for understanding IFRS 9's broader implications, this research contributes to the ongoing discourse on financial stability and risk management in the banking sector, paving the way for more resilient and transparent financial systems. Keywords: IFRS 9 Expected Credit Loss (ECL) Banking Performance Financial Stability Credit Risk Management Probability of Default (PD) Loss Given Default (LGD) Exposure at Default (EAD). Paper type : Theoretical article JEL Classification : G21 M41 G28 IFRS 9 Pertes de Crédit Attendue (ECL) Performance Bancaire Stabilité Financière Gestion du Risque de Crédit Probabilité de Défaut (PD) Perte en Cas de Défaut (LGD) Exposition en Cas de Défaut (EAD). Type de papier : Article théorique Classification JEL : G21 M41 G28; IFRS 9; Expected Credit Loss (ECL); Banking Performance; Financial Stability; Credit Risk Management; Probability of Default (PD); Loss Given Default (LGD); Exposure at Default (EAD). Paper type : Theoretical article JEL Classification : G21; M41; G28 IFRS 9; Pertes de Crédit Attendue (ECL); Performance Bancaire; Stabilité Financière; Gestion du Risque de Crédit; Probabilité de Défaut (PD); Perte en Cas de Défaut (LGD); Exposition en Cas de Défaut (EAD). Type de papier : Article théorique Classification JEL : G21; G28 (search for similar items in EconPapers) Published in International Journal of Accounting, Finance, Auditing, Management and Economics, 2025, ⟨10.5281/zenodo.15306836⟩ Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05052796 Access Statistics for this paper More papers in Post-Print from HAL |
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