The Impact of Implementing the IFRS9 Expected Credit Loss (ECL) Model on Capital Adequacy in the Iraqi Banking Sector

Abstract

This study aims to analyze the impact of implementing the International Financial Reporting Standard IFRS9, particularly the Expected Credit Loss model, on capital adequacy in Iraqi commercial banks. The study relied on a descriptive, analytical, and quantitative approach using panel data for a sample of (10) commercial banks listed on the Iraq Stock Exchange during the period (2014-2023). The banks were divided into two phases: pre-implementation (2014-2017) and post-implementation (2018-2023). The results showed a positive and statistically significant impact of implementing IFRS9 on capital adequacy. The standard helped enhance banks' ability to create more proactive provisions for expected credit losses, which reflected in the strength of the capital base and the banks' ability to absorb financial shocks. The study recommends supporting Iraqi banks in fully implementing IFRS 9, developing risk management systems, and adhering to Basel III requirements. This will contribute to enhancing the financial stability of the Iraqi banking sector.