{"id":96,"date":"2026-08-06T14:18:06","date_gmt":"2026-08-06T14:18:06","guid":{"rendered":"https:\/\/jbmipublisher.org\/blog\/?p=96"},"modified":"2026-08-06T14:18:28","modified_gmt":"2026-08-06T14:18:28","slug":"ifrs-9-bank-accounting-comparability","status":"publish","type":"post","link":"https:\/\/jbmipublisher.org\/blog\/2026\/08\/06\/ifrs-9-bank-accounting-comparability\/","title":{"rendered":"Did IFRS 9 Make Bank Accounting Less Comparable? New Evidence Says Yes \u2014 But It&#8217;s Complicated"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\"><em>A JBMI research briefing<\/em><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">When the International Accounting Standards Board (IASB) rolled out IFRS 9 in 2018, the pitch was simple: simpler, more forward-looking accounting for financial instruments should make it easier to compare one bank&#8217;s numbers with another&#8217;s. Nearly a decade on, a new post-implementation study published in&nbsp;<em>Accounting and Business Research<\/em>&nbsp;puts that promise to the test \u2014 and finds the opposite happened, at least so far.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The paper,&nbsp;<a href=\"https:\/\/doi.org\/10.1080\/00014788.2025.2533467\">&#8220;The effect of IFRS 9 on comparability&#8221; by Joana Cardoso Fontes, Argyro Panaretou, and Catherine Shakespeare<\/a>&nbsp;(published online 29 September 2025), is one of the first large-scale, cross-country studies to measure what IFRS 9 actually did to comparability, rather than what it was designed to do. For anyone building financial models, evaluating bank stocks, or drafting disclosure policy, the findings are worth a close read.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Why comparability matters \u2014 and why banks are the test case<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Comparability is one of the qualitative characteristics the IASB&#8217;s own Conceptual Framework says makes financial information useful: if two entities face similar economic conditions, their accounting numbers should look similar; if their circumstances differ, the numbers should differ too. It&#8217;s a deceptively simple idea that&#8217;s hard to measure and even harder to legislate for.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Banks are the natural place to look, because they are the heaviest users of the financial instruments IFRS 9 governs. The standard replaced IAS 39 with three major changes:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Classification and measurement (C&amp;M):<\/strong>\u00a0assets are now classified based on their contractual cash-flow characteristics and the business model under which they&#8217;re held, rather than management&#8217;s stated intent.<\/li>\n\n\n\n<li><strong>The expected credit loss (ECL) model:<\/strong>\u00a0a forward-looking replacement for the old &#8220;incurred loss&#8221; approach, which had been widely blamed for letting banks recognise loan losses too late during the 2008 financial crisis.<\/li>\n\n\n\n<li><strong>New hedge accounting rules:<\/strong>\u00a0a looser, more principles-based framework intended to let banks&#8217; financial statements reflect their actual risk-management activity, without the rigid numerical effectiveness tests IAS 39 required.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Each of these could plausibly push comparability up or down, and the researchers set out to test all three separately rather than treat IFRS 9 as one undifferentiated shock.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">The method: letting each bank&#8217;s own numbers do the talking<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The study draws on 141 IFRS-reporting banks across 28 countries, matched into pairs based on business model and size just before adoption (2017 Q4), and tracked from 2014 through 2021. To measure comparability, the authors use the well-established De Franco, Kothari, and Verdi (2011) approach: estimate how each bank&#8217;s earnings historically map onto its stock returns, then check how well one bank&#8217;s &#8220;accounting function&#8221; predicts another matched bank&#8217;s earnings from the same economic event. The closer the predictions, the more comparable the two banks&#8217; accounting is treated as being.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">To isolate which piece of IFRS 9 was driving any change, the team hand-collected transitional disclosures \u2014 the one-off reconciliations banks published when they switched from IAS 39 to IFRS 9 \u2014 and used them to identify which banks were most exposed to each of the three changes above.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What they found<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Across the full sample, comparability fell after IFRS 9 adoption, and the decline held for both within-country and cross-country bank pairs, at conventional statistical significance levels. But the picture splits sharply once you separate the three drivers:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>The ECL model is the main culprit.<\/strong>\u00a0Banks most affected by the shift to expected credit losses \u2014 those with the largest transitional change in loan loss allowances \u2014 showed the steepest drop in comparability. The added managerial judgement the forward-looking model demands appears to translate into more divergent reported earnings for banks facing similar economic conditions.<\/li>\n\n\n\n<li><strong>Classification and measurement moved the other way.<\/strong>\u00a0Banks that reclassified available-for-sale equity instruments to fair value through profit or loss under the new SPPI (&#8220;solely payments of principal and interest&#8221;) test actually saw comparability\u00a0<em>improve<\/em>\u00a0relative to unaffected banks.<\/li>\n\n\n\n<li><strong>Hedge accounting adopters also gained comparability<\/strong>\u00a0\u2014 though the authors are careful to flag that only a small number of banks in the sample (around 20) chose to adopt IFRS 9&#8217;s new hedge accounting rules rather than sticking with IAS 39, so this result should be read cautiously.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Put differently: the standard&#8217;s most consequential change \u2014 the one built specifically to fix a crisis-era accounting failure \u2014 is also the one that appears to have cost banks some comparability, even as the standard&#8217;s other two components delivered on the IASB&#8217;s original hope.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">How this fits the wider literature<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The finding sits alongside a growing body of ECL-focused research. Separate studies have documented that the expected credit loss model can dampen credit supply to riskier, harder-to-assess borrowers such as SMEs, and that banks have pulled back lending to obligors at elevated risk of a rating downgrade since adoption \u2014 evidence that the model&#8217;s effects reach well beyond the income statement into real lending decisions. Other work has linked ECL adoption to more conservative capital planning: one 2025 study of Jordanian commercial banks found measurable increases in capital-to-assets ratios and corresponding declines in loan-to-assets ratios following ECL implementation, consistent with banks building buffers against the model&#8217;s more forward-looking provisioning demands.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">It&#8217;s worth noting that the IASB&#8217;s own post-implementation reviews of both the classification-and-measurement requirements (completed December 2022) and the impairment requirements (completed July 2024) concluded that both sets of rules are broadly &#8220;working as intended,&#8221; while flagging areas \u2014 particularly around disclosure \u2014 where further guidance would help. A review of the hedge accounting requirements is scheduled to begin in early 2026. Fontes, Panaretou, and Shakespeare&#8217;s comparability findings don&#8217;t contradict that verdict so much as add a layer underneath it: the rules can be functioning as designed at the level of individual banks&#8217; judgement calls, while still producing less comparable outputs across the industry as a whole.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">The takeaway for practitioners and standard setters<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Three practical implications stand out:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Analysts comparing banks&#8217; credit quality should look past the headline ECL numbers.<\/strong>\u00a0Two banks with genuinely similar loan books may now report materially different loss allowances simply because of how much discretion each exercised in its economic scenario modelling \u2014 not because their underlying risk differs.<\/li>\n\n\n\n<li><strong>Standard setters have a live opening to act.<\/strong>\u00a0The paper&#8217;s authors argue that additional application guidance on ECL judgement \u2014 echoing feedback the IASB has already received in its impairment post-implementation review \u2014 could help narrow the discretion gap without abandoning the forward-looking model&#8217;s benefits.<\/li>\n\n\n\n<li><strong>The FVPL-only push for equity instruments has some empirical backing.<\/strong>\u00a0Several of the accounting scholars cited in the underlying research have separately argued for scrapping the fair-value-through-OCI election for equity investments altogether, on the view that FVPL alone gives more consistent, decision-useful information. This study&#8217;s finding that FVPL-affected banks gained comparability lends some support to that position.<\/li>\n<\/ol>\n\n\n\n<h2 class=\"wp-block-heading\">A caveat worth keeping in mind<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The authors are transparent about the limits of their design: this is short-run, post-adoption evidence (through 2021), it can&#8217;t speak to how comparability evolves as banks and markets grow more familiar with the standard, and the hedge-accounting result in particular rests on a small sample. They also note that changes in accounting rules can shift what assets banks choose to hold in the first place \u2014 a behavioural response their design isn&#8217;t built to fully separate from the pure accounting effect.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Still, as one of the first systematic, multi-country post-implementation studies of IFRS 9&#8217;s comparability effects, this is a paper that deserves attention from standard setters currently deciding what, if anything, to fix.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p class=\"wp-block-paragraph\"><em>Source: Fontes, J. C., Panaretou, A., &amp; Shakespeare, C. (2025). The effect of IFRS 9 on comparability.<\/em>&nbsp;Accounting and Business Research.&nbsp;<em>https:\/\/doi.org\/10.1080\/00014788.2025.2533467<\/em><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Further reading<\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>IFRS Foundation. (2022).\u00a0<a href=\"https:\/\/www.ifrs.org\/projects\/completed-projects\/2022\/post-implementation-review-of-ifrs-9-classification-and-measurement\/\">Post-implementation Review of IFRS 9 \u2014 Classification and Measurement<\/a>.<\/li>\n\n\n\n<li>IFRS Foundation. (2024).\u00a0<a href=\"https:\/\/www.ifrs.org\/projects\/completed-projects\/2024\/post-implementation-review-of-ifrs-9-impairment\/\">Post-implementation Review of IFRS 9 \u2014 Impairment<\/a>.<\/li>\n\n\n\n<li>Ertan, A. (2021).\u00a0<em>Expected losses, unexpected costs? Evidence from SME credit access under IFRS 9.<\/em>\u00a0Working Paper, London Business School.<\/li>\n\n\n\n<li>Bischof, J., Haselmann, R., Kohl, F., &amp; Schlueter, O. (2022).\u00a0<em>Limitations of implementing an expected credit loss model.<\/em>\u00a0Working Paper, University of Mannheim, Goethe University Frankfurt, and Deutsche Bundesbank.<\/li>\n\n\n\n<li>Shubita, M. (2025). Assessing the impact of IFRS 9&#8217;s Expected Credit Loss model on capital budgeting.\u00a0<em>Banks and Bank Systems, 20<\/em>(2), 83\u201394.<\/li>\n\n\n\n<li>De Franco, G., Kothari, S. P., &amp; Verdi, R. S. (2011). The benefits of financial statement comparability.\u00a0<em>Journal of Accounting Research, 49<\/em>(4), 895\u2013931.<\/li>\n\n\n\n<li>Kvaal, E., Loew, E., Novotny-Farkas, Z., Panaretou, A., Renders, A., &amp; Sampers, P. (2024). Classification and measurement under IFRS 9: a commentary and suggestions for future research.\u00a0<em>Accounting in Europe, 21<\/em>(2), 154\u2013175.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>A JBMI research briefing When the International Accounting Standards Board (IASB) rolled out IFRS 9 in 2018, the pitch was simple: simpler, more forward-looking accounting for financial instruments should make&hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-96","post","type-post","status-publish","format-standard","hentry","category-business"],"_links":{"self":[{"href":"https:\/\/jbmipublisher.org\/blog\/wp-json\/wp\/v2\/posts\/96","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jbmipublisher.org\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jbmipublisher.org\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jbmipublisher.org\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/jbmipublisher.org\/blog\/wp-json\/wp\/v2\/comments?post=96"}],"version-history":[{"count":1,"href":"https:\/\/jbmipublisher.org\/blog\/wp-json\/wp\/v2\/posts\/96\/revisions"}],"predecessor-version":[{"id":97,"href":"https:\/\/jbmipublisher.org\/blog\/wp-json\/wp\/v2\/posts\/96\/revisions\/97"}],"wp:attachment":[{"href":"https:\/\/jbmipublisher.org\/blog\/wp-json\/wp\/v2\/media?parent=96"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jbmipublisher.org\/blog\/wp-json\/wp\/v2\/categories?post=96"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jbmipublisher.org\/blog\/wp-json\/wp\/v2\/tags?post=96"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}