GAAPS AND IFRS PROVISIONING AND THE QUALITY OF LOAN PORTFOLIO: A CASE OF MALAYSIAN AND NIGERIAN BANKS
ONALO UGBEDE *
Faculty of Technology Management, Universiti Tun Hussein Onn, Malaysia.
MOHD LIZAM
Faculty of Technology Management, Universiti Tun Hussein Onn, Malaysia.
AHMAD KASERI
Faculty of Technology Management, Universiti Tun Hussein Onn, Malaysia.
*Author to whom correspondence should be addressed.
Abstract
Giving evidences that understanding quality of a bank's loan portfolio is of great importance in determining the risk to depositors and country’s specific deposit insurance fund and empirical findings that different accounting standards impact differently on the quality of loan portfolio, this study examined the effects of Malaysian and Nigerian GAAPs and IFRS provisioning on the quality of loan portfolio of Malaysian and Nigerian banks. The population of this study consists of all Malaysian and Nigerian banks and panel data were gathered over a period of 6 (2008-2013) years divided equally into pre and post adoption periods. Panel multiple regression analyses were performed and results tends towards the same direction, establishing that Malaysian and Nigerian banks quality of loan portfolio significantly increased after the implementation of IFRS. With results establishing the superiority of IFRS over Malaysian and Nigerian domestic GAAPs, this study recommends that banks globally should adopt IFRS. This study also recommends that more studies should be conducted using banks of other countries particularly, banks of developed countries.
Keywords: GAAP, loan quality, accounting standards, loan loss provisions, incurred loss approach, expected loss approach