Abstract
This study is to examine the improvement in accounting standards IAS/IRS on the 24 Lebanese banks profitability, concerning the financial crisis. Over the period 2000Q1–2015Q4, the period is divided as pre-IAS/IFRS adoption, post-IAS/IFRS adoption, Post-IAS/IFRS adoption-pre-world crisis, and Post-IAS/IFRS adoption-post-world crisis. Via applying GMM the main results show that assets quality have a positive influence under GAAP on bank profitability, and negatively under the IAS/IFRS with minting their trend after the financial crisis. Also, liquidity and capital adequacy have a negative effect on bank profitability which increased Post-IAS/IFRS adoption-post-world crisis comparing with GAAP, which gives a signal prior the crisis under IAS/IFRS, in turn, it led to increasing the leverage. Moreover, there is a negative relationship between economic activities (Co-Index) under GAAP on bank profitability, whereas the value reduced under the adoption of IFRS which reflect the mark-to-market value of financial assets. Therefore, improvement in standards of transparency and reduction of complexity both increase financial stability and thereby restore participants’ confidence in the financial market.
Disclosure statement
No potential conflict of interest was reported by the authors.
Notes
* Accepted by Yue Ma upon recommendation by Junbo Wang.
1. Association of Banks in Lebanon Research & Statistics Department, the Economic Letter; July 2015, and January 2017.
2. Banque Du Liban, Basic circulars No 73 and 76.