The implications of IFRS 9 implementation on GCC banks performance

Purpose International Financial Reporting Standard 9 (IFRS 9) was adopted to supersede International Accounting Standard 39 (IAS 39), which has received extensive criticism following its enactment. This study aims to analyze how applying this standard influence credit risk practices, the expansion of lending activities and the overall financial condition of banks listed on stock markets within Gulf Cooperation Council (GCC) nations. Design/methodology/approach With IFRS 9 becoming effective at the start of the 2018 fiscal year, a statistical examination using both the paired t-test methodology and panel data regression techniques was applied to information gathered manually from annual disclosures of 51 GCC-listed banks over the 2013–2022 span. This timeframe ensures an even distribution of observations preceding and following the implementation of IFRS 9. Findings Research indicates a reduction in credit-related risk after IFRS 9 came into effect. However, this accounting change has adversely impacted both the expansion of lending and overall financial health. The expected loss-based provisioning required by IFRS 9 enhances control over credit exposure but concurrently restricts lending capacity and weakens financial health. Originality/value This research is considered to offer valuable insights to existing literature, being among the initial studies to explore this topic within GCC nations, while also presenting fresh evidence on the long-term impact of the new standard on the performance of banks in emerging economies.