The Effect of transition into expected credit loss on changes in Capital Adequacy Ratio, Empirical Study on Banks Listed in Damascus Stock Exchange

Abstract

The objective of this study is to identify the changes in the capital adequacy ratio (CAR) resulting from the implementation of the expected credit loss in accordance with the International Financial Reporting Standards \9\ and the related requirements of the Central Bank of Syria, in particular requirement no. 4\ MN in 2019, by performing the paired samples T-test for CAR and its components, regulatory capital and risk-weighted financial assets for the traditional bank listed on the Damascus Stock Exchange (DSE) for the period 2018, as the data are available before the implementation and after the conversions, it showed that there are significant changes in CAR and its related components, as banks have used retained earnings to cover the increase in allowance for expected credit losses and to model additional allowances related to balances with banks, deposits with banks, financial assets at amortized cost, financial assets through other comprehensive income (FAOCI) and increasing direct and indirect allowances for expected credit losses.