The Impact of International Financial Reporting Standard “IFRS 9” on Financial Performance: Evidence from Palestinian Banks رسالة ماجستير

Abstract

International Financial Reporting Standard 9 (IFRS 9) came into effect on 1 January 2018, and early application was allowed. IFRS 9 shifts the looking of banks from backward to forward and from historical to future expectations in the financial statements reports, and this study aims to examine the impact of IFRS 9 on the financial performance of Palestinian banks. Over the period 2014Q1-2021Q4, the period is divided into pre-IFRS 9 adoption and post-IFRS 9 adoption. By using the generalized method of moments (GMM), the results show that the impact of IFRS 9 is negative on the financial performance of banks, mainly because of the negative effect of increasing credit loss provision because of the new model of impairment under IFRS 9, which is expected credit loss model. The negative impact of this provision is the most significant compared to other variables. Also, this new model leads to increases in the strength of the negative influence of the direct credit facilities to asset ratio on the financial performance of banks.