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Effect of IFRS 9 Expected Credit Loss Provisioning on Credit Risk among Deposit Money Banks in Nigeria

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  • September 15, 2026
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Emeribe Blessing Ijeoma 1 & Eneh, Sylvia Nnenna, Ph.D., TRCN, ACA 2

Abstract         

This study investigated the effect of IFRS 9 expected credit loss provisioning on credit risk among deposit money banks in Nigeria between 2014 and 2025. The specific objectives were to determine the effect of expected credit loss provisioning, examine the effect of loan-loss provision adequacy, and assess the effect of non-performing loan recognition under the expected credit loss model on credit risk among deposit money banks in Nigeria. Using panel data obtained from five selected deposit money banks and employing Panel Least Squares regression analysis, the study found that all three explanatory variables had statistically significant effects on credit risk. Expected Credit Loss Provisioning (ECLP) had a positive and statistically significant effect on credit risk (β = 0.067027, p = 0.0032), indicating that higher expected credit loss provisioning was associated with increased credit risk. Loan-Loss Provision Adequacy (LLPA) had a negative and statistically significant effect on credit risk (β = -0.009422, p = 0.0000), suggesting that adequate loan-loss provisions contribute to reducing credit risk. Non-Performing Loan Recognition under the Expected Credit Loss Model (NPLR_ECLM) also had a positive and statistically significant effect on credit risk (β = 0.854250, p = 0.0000), indicating that increased recognition of non-performing loans reflects higher credit-risk exposure. The regression model recorded an R-squared value of 0.998319, indicating that approximately 99.83% of the variation in credit risk was explained by the explanatory variables. The findings suggest that effective implementation of IFRS 9 expected credit loss provisioning, adequate loan-loss provisions, and timely recognition of non-performing loans are important considerations in managing credit risk among Nigerian deposit money banks. It is concluded that banks should strengthen their expected credit loss estimation processes, maintain adequate provisions, and improve the timely identification and recognition of deteriorating loan quality to enhance credit-risk management and financial stability.

Keywords: IFRS 9, Expected Credit Loss Provisioning, Loan-Loss Provision Adequacy, Non-Performing Loans, Credit Risk, Deposit Money BanksCite: Emeribe, B. I.  & Eneh, S. N. (2026). Effect of IFRS 9 Expected Credit Loss Provisioning on Credit Risk among Deposit Money Banks in Nigeria. International Journal of Accounting Research and Financial Insights,4(5), 456-475.https://doi.org/10.5281/zenodo.22762380

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