This study examines the impact of the transition from IAS 39 to IFRS 9 on the credit loss forecasting ability of banks, and its implications for value relevance. The implementation of IFRS 9 brought about a shift from the Incurred Credit Loss (ICL) model to the Expected Credit Loss (ECL) model, emphasizing forward-looking information. We analyze data from small and medium sized banks, exploring their ability to forecast credit losses between 2018 to 2022. Our findings reveal that the adoption of IFRS 9 has led to a noteworthy enhancement in medium size banks' credit loss forecasting accuracy. This improvement is consistent with the increased value relevance of the financial information presented. Drawing parallels with studies like Mechelli & Cimini (2021), our results suggest that the refined credit loss forecasting, as facilitated by IFRS 9, contributes to the overall value relevance of financial reporting in the banking sector. This study underscores the significance of regulatory changes and their implications for both financial reporting and market perception in the banking industry.
| Identifer | oai:union.ndltd.org:UPSALLA1/oai:DiVA.org:sh-52327 |
| Date | January 2023 |
| Creators | Al-Fakhoury, Nour, Shaker, Nour-Eddin |
| Publisher | Södertörns högskola |
| Source Sets | DiVA Archive at Upsalla University |
| Language | Swedish |
| Detected Language | English |
| Type | Student thesis, info:eu-repo/semantics/bachelorThesis, text |
| Format | application/pdf |
| Rights | info:eu-repo/semantics/openAccess |
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