THE IMPACT OF IMPLEMMENTING IFRS13 (FAIR VALUE) ON FINANCIAL PERFORMANCE IN THE BANKING SECTOR

Abstract

Due to the development of the global accounting system, the fair value system has been developed to International Financial Reporting Standard 13(IFRS13), which aims to measure fair value in order to predict business performance and cash flows in a more appropriate way for decision-making and disclosing information also helps in making a comparison between organizations that use fair value. The bank sector on of the most important part of economic growth and its commit to applying these international standards, which will achieve and help in its financial stability in the countries . The main purpose of this study is to examine the impact of implementing IFRS13 on the financial performance in the Palestinian banks listing in the exchange market .So its sough to attain its objectives include :explain the effect of the fair value model on the financial performance in the banking sector, analyze the relationship between fair value and profitability ratios ROA and ROE by the entire liquidity(LTA,LTD) ratio and credit performance ratio in the Palestinian bank listed in the exchange market , finally examine the effect of the fair value model on the financial performance in the Palestinian bank listed in the exchange market . Therefore, the researcher using to collect information a relevant literatures and depend on quantitative analysis to examine the relationships by analyzed the semiannual financial statements of the targeted banks to find the financial ratios, which using in this study . Five Palestinian banks which analyzed its financial data and examine the relationships between variables by using aggregate model and huasman tests to determines appropriate model fixed and random model , the number of observations was 120, which is the time dimension of the study, by using panel data analysis . The variables which used were fair value as dummy variable before IFRS 13 for two years and after the standard issued for long term period , dependent variable is profitability by using ROA and ROE , and control variables were liquidity (LTA,LTD) and credit performance by using LLP ratio . vi From the previous studies which explained the reason for the emergence of the standard (IFRS13), and that it came to solve the problems of using fair value, but the use of the fair value model has been argued regarding the impact it may have, given that it depends on forecasting , especially at the level3, which is based on predictions , additionally the cost of implementing of the model and study the cost –benefit analysis related its models. Through the data analysis , the results were drawn, the most important of which are: A positive relationship was found between fair value and financial performance depend on ROA ROE positive, and LLP is positive relationship that indicate the importance of credit performance and manage the loans of banks to avoid its credit risk ,While the liquidity ratio (LTD) had a limited impact in all cases and positive effect in LTA that‟s mean the importance of loans as total assets. The market conditions in Palestine country have affected the performance of banks, from the Corona pandemic in 2020 to the rise in interest rates globally in 2022 Therefore, the analysis results for individual groups were different as a result of unexpected market changes. Through this study and its results, the researcher reached several recommendations, including: using case study to examine the negative effects appears in individual samples, attention in different sectors in economy to analysis the impact of implementing IFRS 13 ,expanding in study by using liquidity ratios other than LTD in Palestinian bank . Keywords: fair value ,financial performance , ratio analysis , liquidity, credit performance.