The Impact of Applying the Expected Credit Loss (ECL) Model According to IFRS 9 on Capital Adequacy in the Iraqi Banking Sector

This paper seeks to evaluate the effect of utilizing the International Financial Reporting Standard (IFRS9); in particular, Expected Credit Loss (ECL) model on the capital adequacy of Iraqi commercial banks. A descriptive and analytical method was adopted with the use of panel data for a group of 10 private sector banks listed on Iraq Stock Exchange for the duration (2014-2023). This period was further broken down into pre- (2014–17) and post-application (2018–23). The findings indicated a positive and significant effect of adoption of IFRS 9 on capital adequacy. The enhanced medium banks' ability to, independently and ahead of time, anticipate future credit losses allowed them to bolster the strength of their capital stockpile and their resilience to financial shocks. The research suggests supporting Iraqi banks to fully implement the conditions of applying IFRS9, in addition to Building risk management systems and committing to Basel III Conditions. This would enhance the financial stability of the banking sector in Iraq.