A Comparison Study between IFRS 9 and IAS 39 in GCC Countries

Abstract

IFRS 9 was introduced as a replacement for IAS 39, which spurred a wide debate since its implementation. This study aims to show the impact of IFRS 9 on the performance, solvency, credit ratio, capital adequacy ratio, expected credit loss, non-performing credits and write-offs for local banks operating within the Gulf Cooperation Council. To achieve the objectives of this study, data from financial disclosures was collected for 53 GCC banks for the period 2012-2020, which had 477 years of observation. The cross-sectional data was analyzed using the logit model (panel logistic regression model), capable of extracting non-linear relationships. This study found that there was a substantial positive difference in the percentage of the provision for credit losses, write-offs, and credit and non-performing credit ratios after the implementation of the IFRS 9. In contrast, no substantial difference was found in financial performance indicators, solvency, and capital adequacy ratio. The study offered a set of recommendations based on these findings and offered a number of potential future research opportunities to enrich the topic.