Abstract

The Role of Loan Loss Provisions Under IFRS 9 In Mitigating Aggressive Lending Behavior: By Application in the Union Bank of Iraq

Ahmed Taher Kadhim Al-Anbagi

Volume: 15 Issue: 4 2025

Abstract:

The global financial crisis of 2008 demonstrated the inadequacy of the accounting treatments outlined in International Financial Reporting Standard (IAS) 39, Financial Instruments. This standard relies on an actual loss model for credit loss recognition, meaning losses are only recognized when they occur.

This research aims to discuss the provisions of International Financial Reporting Standard 9 (IFRS 9), particularly regarding Expected Credit Loss (ECL), and its role in mitigating aggressive lending behavior. To achieve the research objectives, several indicators were used on the sample bank, the Iraqi Union Bank, listed on the Iraq Stock Exchange. These indicators included the LGR, the Loans-to-Deposits Ratio (LDR), the Change in Loss Items (?LLP), the Return on Equity (ROA), and the liquidity calculation using the ratio of operating cash flow to total assets. A simple regression model was then applied to arrive at the research findings. The research reached several conclusions, the most important of which was that applying International Financial Reporting Standard (IFRS 9) contributes to reducing aggressive lending behavior by banks towards customers.

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