1Faculty of Business Administration, Al Maaref University, Beirut, Lebanon
2Asia Pacific College of Business & Law, Charles Darwin University, Australia
*Corresponding author:Hassan I Rkein, Faculty of Business Administration, Al Maaref University, Beirut, Lebanon
Submission: September 09, 2020;Published: October 07, 2020
The ill-timed recognition of Credit Losses had proven to have a remarkable negative impact not only
on the financial position of the banks, but also it affected the banks’ going concern and sustainability. This
has been evidenced by the most recent Global Financial Crisis (GFC) in 2007, whereby banks and other
financial institutions have been obliged to implement the IFRS 9 accounting standard (International Financial
Reporting Standard 9). The financial instrument IFRS 9 requires firms to model future events in
the macroeconomic environment and calculate Expected Credit Loss (ECL) for their financial instruments
over either a 12 month or lifetime period. The implementation of this newly developed and implemented
accounting principle will help in reducing the likelihood of a repetition of another financial crisis based
on similar causes since it allows investors to know detailed information about any projected credit losses.
Financials need to know if this shifting in accounting principles will lead to eliminating or reducing
financial crisis.
This paper puts forward as assessment of the impact on Lebanese banks linked to the transition from
IAS 39 to IFRS 9, aiming to figure out if this new instrument helped avoiding financial crisis in the banking
sector. This is an exploratory, qualitative research using inductive approach. Data will be collected using a
simple questionnaire distributed to a sample of Lebanese banks. The paper offers a review of the International
Financial Reporting Standards including history, the goals behind the implementation of common
standards, defining IFRS principles that are applied in banks, and assessing the top concerns in applying
IFRS 9 in banks with emphasis on Lebanon. The research`s outcome will propose a framework of recommendations
to adopt the new accounting principle IFRS 9 in Banks in a way that will help in avoiding and
eliminating the financial crisis.
Keywords: Financial crisis; Financial instruments; IAS 39, IFRS 9