Olalekan AJAYI
Perinatal Journal - 2026;34(2):628-639
This study examined the effect of IFRS adoption on loan loss provisioning in Nigerian deposit money banks listed on the Nigerian Exchange Group over the 2014-2024 period, spanning both the pre-IFRS 9 (2014-2017) and post-IFRS 9 (2018-2024) impairment regimes. A quantitative ex post facto design was adopted using balanced panel data from 12 listed banks, yielding 132 bank-year observations. IFRS adoption was captured through a binary dummy variable, and the analysis was conducted using a fixed-effects panel regression model with bank-level clustered robust standard errors. IFRS adoption had a positive and statistically significant effect on the loan loss provision ratio (beta = 0.0105, p = 0.012), indicating that Nigerian listed banks reported higher provisions relative to gross loans in the post-adoption period after controlling for bank size, profitability, and credit risk. Non-performing loans were the strongest determinant of provisioning (beta = 0.261, p < 0.001), confirming that credit quality remained the primary driver of impairment recognition alongside the regime change. Profitability was negative but statistically insignificant. The study concludes that the transition from IAS 39 to IFRS 9 produced a measurable upward shift in provisioning levels among listed Nigerian banks, consistent with the expected credit loss framework's requirement for earlier and broader impairment recognition, while credit risk continued to anchor provisioning to underlying loan quality. Prudential regulators, audit committees, and external auditors should give greater attention to the assumptions and credit risk evidence underlying post-adoption expected credit loss estimates, and investors should interpret rising provisions in the context of both the stricter impairment regime and concurrent credit quality developments.
