Authors: Nikolaos Eriotis, Dimitrios Vasiliou, Dimitrios Balios, Theodoros Kounadeas

Title: Theoretical aspects of IFRS 9 impact on liquidity of banks.

Abstract

There is no doubt that the financial crisis of previous years has negatively affected almost the entire spectrum of economic activity. In the banking sector, the increase in non-performing loans, the loss of value of held securities, the overall decline in the value of financial assets and liquidity constraints are just some of the negative effects of the crisis. As providers of funds to economic agents who do not have access to financial markets, banks play an important role in the functioning of modern economies, so it is essential to provide high quality accounting information to users of their financial statements. The adoption of International Accounting Standards (IAS) / International Financial Reporting Standards (IFRS) for the preparation of financial statements has contributed decisively to the improvement of the provided accounting information. We conduct a literature review on how the valuation of financial assets (in accordance with IAS 39) has affected the liquidity and earnings volatility of the European banking industry. We also present, through a critical review of the above impacts, the reasons that led to the gradual replacement of IAS 39 by IFRS 9.