IFRS 9 and its impact on the stability of financial institutions
DOI:
https://doi.org/10.61357/sehs.v13i1.35Keywords:
financial instruments, IAS 32, IAS 39, IFRS 7, IFRS 9Abstract
This paper deals with the mandatory implementation of IFRS 9 – Financial Instruments: Recognition and Measurement, effective as of January 1, 2018, a possible result of which might have been a steep increase in loss allowance on bank receivables that could threaten the banking sector. This increase was reported in preliminary surveys of the top four accounting companies. The aim of this paper was to investigate the first factual data available from the interim financial statements of banks during 2018. Using the Wilcoxon Rank Sum test, the impact of this standard was evaluated to determine whether the expected increase in loss allowance produced a significant change. The test results confirmed the hypothesis that the increase was not significant. Therefore, the mandatory implementation of IFRS 9 – Financial Instrument: Recognition and Measurement did not result in a significant change in the classification of bank receivables and thus did not jeopardize the financial stability of the banking sector. In addition to the impact of the new standard on the stability of financial institutions, this paper also provides an overview of the most fundamental changes in the area of financial instruments.
References
AEGON ASSETM MANAGEMENT GLOBAL (2017). Regulatory Insight: Major Impact IFRS – 9 on Insurance Companies. [online]. [cit. 2019-02-27]. Available at: https://www.aegonassetmanagement.com/global/investment-solutions-center/publications/regulatory-insight-major-impact-ifrs-9-on-insurance-companies/
AIR Bank, a. s. (2018). Mezitimní účetní závěrka 2018. [online]. [cit. 2019-02-15]. Available at: http://www.airbank.cz
BANKA CREDITAS, a. s. (2018). Mezitimní účetní závěrka 2018. [online]. [cit. 2019-02-15] Available at: http://www.creditas.cz
BARCLAY. (2017). IFRS 9 – Bigger than Basel IV: Equity Research. [online]. [cit. 2019-08-28]. Available at: http://www.eifr.eu/document/file/download/1877/barclays-european-banks-ifrs9-bigger-than-basel-iv-jan-17-pdf
BROWN, P. (2011).International Financial Reporting Standards: What Are the Benefits?Accounting and Business Research, 15(3), pp. 269–285.
CAIRNS, D., et al (2011). IFRS Fair Value Measurement and Accounting Policy Choice in the United Kingdom and Australia. The British Accounting Review, 43(1), pp. 1–21.
CASTILO-MERINO, D. (2014). Mandatory IFRS Adoption and the Cost of Equity Capital. Evidence from Spanish Firms. Intangible capital, 10(3), pp. 562–583.
CORNELL, B. and E. SIRRI (1992). The Reaction of Investors and Stock Prices to Insider Trading. Journal of Finance, 47(3), pp. 1031–1059.
ČESKÁ EXPORTNÍ BANKA, a. s. (2018). Mezitimní účetní závěrka 2018. [online]. [cit. 2019-02-15]. Available at: http://www.ceb.cz
ČESKÁ NÁRODNÍ BANKA. (2018). Zpráva o finanční stabilitě. [online]. [cit. 2019-02-15] Available at: http://www.cnb.cz/miranda2/export/sites/www.cnb.cz/cs/dohled_financni_trh/souhrnne_informace_fin_trhy/zprava_o_vykonu_dohledu/download/dnft_2017_cz.pdf
ČESKÁ SPOŘITELNA, a. s. (2018). Mezitimní účetní závěrka 2018. [online]. [cit. 2019-02-15]. Available at: http://www.csas.cz
ČNB. (2018). Základní seznamy regulovaných a registrovaných subjektů. [online]. [cit. 2019-02-03]. Available at: http://apl.cnb.cz/apljerrsdad/jerrs.web07.intro_page?p_lang=cz
DE GEORGE, E.(2016). A Review of the IFRS Adoption Literature. Review of accounting studies, 21(3), pp. 898–1004.
DE GEORGE, E., C. FERGUSON and A. SPEAR (2013). How Much Does IFRS Cost? IFRS Adoption and Audit Fees. Accounting Review, 88(2), pp. 429–462.
DE JONG, A. et al (2006). The Economic Consequences of IFRS: The Impact of IAS 32 on Preference Shares in the Netherlands. Accounting in Europe, 3(2), pp. 196–285.
DELOITTE GLOBAL SERVICES LIMITED. (2016). Sixth Global IFRS Banking Survey: No Time like the Present. [online]. [cit. 2019-08-01]. Available at: https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Financial-Services/gx-fsi-sixth-ifrs-banking-survey.pdf
DELOITTE GLOBAL SERVICES LIMITED. (2017). IAS 32 – Financial Instruments: Presentation: History of IAS 32. [online]. [cit. 2019-08-01]. Available at: https://www.iasplus.com/en/standards/ias/ias32
DEUTSCHE BANK GROUP a. s. (2018). Interim Financial Statements 2018. [online]. [cit. 2019-02-15]. Available at: http://www.db.com
DVOŘÁKOVÁ, D. (2017). Finanční účetnictví a výkaznictví podle mezinárodních standardů IFRS. 5st edition. Brno: BizBooks.
EQUA BANK a. s. (2018). Mezitimní účetní závěrka 2018. [online]. [cit. 2019-02-15]. Available at: http://www.equabank.cz
ERGEGOVAC, R. (2018). IFRS 9 Impact of Bank Landing Policy and Structural Risk Management. Eurasian Journal of Business and Management, 6(3), pp. 53–60.
ERSTE GROUP AG. (2018). Interim Financial Statements 2018. [online]. [cit. 2019-02-15]. Available at: http://www.erstegroup.com
EXPOBANK CZ a. s. (2018). Mezitimní účetní závěrka 2018. [online]. [cit. 2019-02-15], Available at: http://www.expobank.cz
EY. (2015). IFRS 9: Financial Instruments. [online]. [cit. 2019-08-01]. Available at: http://www.ey.com/Publication/vwLUAssets/EY-ifrs-9-financial-instruments/%24FILE/EY-ifrs-9-financial-instruments.pdf
EY. (2017). EY IFRS 9: Impairment Banking Survey. [online]. [cit. 2019-08-01]. Available at: https:// www.ey.com/Publication/vwLUAssets/ey-ifrs-9-impairment-bankning-surey-new/$FILE/ey-ifrs-9-impairment-banking-survey.pdf
FANG, Y. (2018). The Impact of Accounting Laws and Standards on Bank Risks: Evidence from Transition Countries. Journal of Economics and Business, 95 (January-February), pp. 103–118.
FASB. (2018). Comparability in International Accounting Standards: A Brief History. [online]. [cit. 2019-08-01]. Available at: http://www.fasb.org/jsp/FASB/Page/SectionPage&cid=1176156304264
HAVERELS, J. (2007). IAS/IFRS in Belgium: Quantitative Analysis of the Impact on the Tax Burden of Companies. Journal of International Accounting, Auditing and Taxation, 16(1), pp. 69–89.
CHALMERS, K. And J. GODFREY (2004). Reputation Costs: the Impetus for Discretionary Derivative Financial Instrument Reporting. Accounting, Organizations and Society, 29(2), pp. 95–125.
CHEN, H., Q. TANG, Y. JIANG and Z. LIN (2010). The Role of International Financial Reporting Standards in Accounting Quality: Evidence from European Union. Journal of International Financial Management and Accounting, 21(3), pp. 22–28.
CHRISTENSEN, H. B. (2012). Why Do Firms Rarely Adopt IFRS Voluntary? Academics Find Benefits and the Cost Appear to Be Low. Review of Accounting Studies, 17(3), pp. 518–525.
IASB. (2013). Snapshot: Financial Instruments: Expected Credit Losses: Exposure draft. [online]. [cit. 2019-08-03]. Available at: http://www.ifrs.org/-/media/project/fi-impairment/exposure-draft-2013/published-documents/ed-expected-credit-losses-snapshot.pdf
IASB. (2014). IFRS 9 Financial Instruments: Project summary. [online]. [cit. 2019-08-01]. Available at: http://archive.ifrs.org/Current-Projects/IASB-Projects/Financial-Instruments-A-Replacement-if-IAS-39-Financial-Instruments-Recognition/Documents/IFRS-9-Project-Summary-July-2014.pdf [Accessed 01.08.2019].
IFRS FOUNDATION. (2017). IAS 39 – Financial Instrument: Recognition and Measurement.
IFRS FOUNDATION. (2017). IFRS 9 Financial Instruments: About. [online]. [cit. 2019-02-28]. Available at: http://www.ifrs.org/issued-standards/list-of-standards/ifrs-9-financial-instruments
IFRS FOUNDATION. (2018). Kapitola 4.1. [online]. [cit. 2019-08-28]. Available at: http://eifrs.ifrs.org/eifrs/PdfAlone?id=19280&sidebarOption=UnccompaniedIfrs
J&T BANKA, a .s. (2018). Mezitimní účetní závěrka 2018. [online]. [cit. 2019-02-15]. Available at: http://www.jtbank.cz
JEONG-BON,K., L. XIAOHONG and L. ZHENG (2012). The Impact of Mandatory IFRS Adoption on Audit Fees: Theory and Evidence. The Accounting Review, 87(6), pp. 2061–2094.
JERMAKOWICY, E. K. and. S. GORNIK-TOMASZEWSKI (2006). Implementing IFRS from the Perspective of EU Publicly Traded Companies. Journal of International Accounting, Auditing and Taxation, 15(2), pp. 170–196.
KOMERČNÍ BANKA, a. s. (2018). Mezitimní účetní závěrka 2018. [online]. [cit. 2019-02-15]. Available at: http://www.kb.cz
KROM, C. (2009). Preparing for IFRS: Great Online Information Sources. The CPA journal. 79(4), pp. 9–10.
LANA, S. and A. CAUCHET (2016). IFRS 9: The Impact on Regulatory Capital. Accountancy Ireland, 48(6), pp. 44–45.
LANDSMAN, W. R., E. L. MAYDEWA and J. R. THORNOCK (2012): The Information Content of Annual Earnings Announcements and Mandatory Adoption of IFRS. Journal of Accounting and Economics, 53(1), pp. 34–54.
LI, S. (2010). Does Mandatory Adoption of International Financial Reporting Standards in the European Union Reduce the Cost of Equity Capital? The Accounting Review. 85(2), pp. 607–636.
MANGANARIS, P. (2015). The Effects of Mandatory IFRS Adoption and Conditional Conservatism on European Bank Values. Journal of International Accounting, Auditing and Taxation, 24, pp. 72–81.
MARTON, J. (2017). The Predictive Ability of Loan Loss Provisions in Banks – Effects of Accounting Standards, Enforcement and Incentives. The British Accounting Review, 49(2), pp. 162–180.
MEEK, G., et al (1995). Factors Influencing Voluntary Annual Report Disclosures by US, UK and Continental European Multinational Corporations. Journal of International Business Studies, 26(3), pp.559–572.
MODRÁ PYRAMIDA STAVEBNÍ SPOŘITELNA, a. s. (2018). Mezitimní účetní závěrka 2018. [online]. [cit. 2019-02-15]. Available at: http://www.modrapyramida.cz
MONETA MONEY BANK, a. s. (2018). Mezitimní účetní závěrka 2018. [online]. [cit. 2019-02-15]. Available at: http://www.moneta.cz
O´CONNELL, V. and K. SULLIVAN (2008). The Impact of Mandatory Conversion to IFRS on the Net Income of FTS Euro First 80 Firms. Journal of Applied Research in Accounting and Finance, 3(2), pp.17–26.
OTP BANK (2018). Interim Financial Statements 2018. [online]. [cit. 2019-02-15]. Available at: http://www.otpbank.hu
OZILI, P. (2018). Bank Income Smoothing in South Africa: Role of Ownership, IFRS and Economic Fluctuation. International Journal of Emerging Markets, 13(5), pp. 1372–1394.
PPF BANKA a. s. (2018). Mezitimní účetní závěrka 2018. [online]. [cit. 2019-02-15]. Available at: http://www.ppfbanka.cz
PRCHAL, L. (2017). IFRS 9 se blíží: Jste připraveni? Bankovnictví. 10, pp. 22–23.
PROCHÁZKA, D. (2016). Vynucené přijetí ifrs českými nekótovanými podniky: hodnocení přínosů a nákladů. Acta Oeconomica Pragensia. Praha: VŠE, pp. 46–62.
PWC. (2017). IFRS 9: Financial Instruments: Understanding the Basics. [online]. [cit. 2019-02-03]. Available at: http://www.pwc.com/gx/en/audit-services/ifrs/publications/ifrs-9/ifrs-9-understanding-the-basics.pdf
SBERBANK CZ, a. s. (2018). Mezitimní účetní závěrka 2018. [online]. [cit. 2019-02-15]. Available at: http://www.sberbank.cz
UNICREDIT BANK CZECH REPUBLIC NAD SLOVAKIA, a. s. (2018). Mezitimní účetní závěrka 2018. [online]. [cit. 2019-02-15]. Available at: http://www.unicreditbank.cz
UZMA, S. (2016). Cost-Benefit Analysis of IFRS Adoption: Developed and Emerging Countries. Journal of Financial Reporting & Accounting, 14(2), pp.198–229.
VERRECCHIA, R. (1999). Disclosure and the Cost of Capital: A Discussion. Journal of Accounting and Economics, 26(1), pp. 271–283.
WALKER, I. (2013). Výzkumné metody a statistika. Praha: Grada Publishing, a. s.
WUSTENROT – STAVEBNÍ SPOŘITELNA a. s. (2018). Mezitimní účetní závěrka 2018. [online]. [cit. 2019-02-15]. Available at: http://www.wuestenrot.cz
WUSTENROT HYPOTEČNÍ BANKA a. s. (2018). Mezitimní účetní závěrka 2018. [online]. [cit. 2019-02-15]. Available at: http://www.wuestenrot.cz
YIP, R. and Y. DANQING (2012). Does Mandatory IFRS Adoption Improve Information Comparability? The Accounting Review, 87(5), pp. 1767–1789.
Downloads
Published
How to Cite
Issue
Section
License
For all articles published in SEHS, copyright is retained by the authors. Articles are licensed under an open access Creative Commons CC BY 4.0 license, meaning that anyone may download and read the paper for free.
