IFRS 9 and its impact on the stability of financial institutions

Abstract

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.