The Effectiveness of IFRS 9 In Managing Credit Risk Amidst Exchange Rate Volatility in Nigeria Banks

  • Home/
  • The Effectiveness of IFRS 9 In Managing Credit Risk Amidst Exchange Rate Volatility in Nigeria Banks

The Effectiveness of IFRS 9 In Managing Credit Risk Amidst Exchange Rate Volatility in Nigeria Banks

Geoffrey Ndubuisi Udefi PhD, Ngwa, Christian Ugonna PhD, & Ojeh, Augustine PhD FCA

1Department of Accountancy, Alex Ekwueme Federal University Ndufu-Alike (AE-FUNAI), Ebonyi State, Nigeria
2 3 Department of Accountancy, Enugu State University of Science and Technology, Enugu State, Nigeria

Abstract

This study investigates the effectiveness of IFRS 9 in managing credit risk within Nigerian banks amidst exchange rate volatility. Data were collected using a structured questionnaire distributed to 134 professionals involved in risk management and financial operations within Nigerian commercial banks. The findings reveal that 60% of respondents believe IFRS 9 has been moderately effective in enhancing credit risk management, though its full potential is hindered by the unpredictability of exchange rate fluctuations. Over half (55%) of the respondents reported challenges in aligning IFRS 9’s requirements with Nigeria’s volatile foreign exchange environment, particularly in accurately estimating Expected Credit Loss (ECL). Additionally, 52% of respondents identified insufficient training and lack of technological tools as significant barriers to effective IFRS 9 implementation. Despite these challenges, 70% of respondents agreed that IFRS 9 has helped improve risk management frameworks in Nigerian banks. However, the macroeconomic instability in the Nigerian market limits its overall impact. Based on these findings, the study recommends capacity-building initiatives for banking staff, policy reforms to stabilize the exchange rate, and collaboration with external experts to ensure the effective implementation of IFRS 9. These actions are crucial for enhancing the resilience of Nigerian banks in managing credit risk amidst external economic shocks.

Keywords: IFRS 9; Credit Risk Management; Exchange Rate Volatility; ECL; Nigerian Banks

Cite as:
Udefi, G. N., Ngwa, C. U. & Ojeh, A. (2025). The Effectiveness of IFRS 9 In Managing Credit Risk Amidst Exchange Rate Volatility in Nigeria Banks. International Journal of Financial Economics and Accounting, 5(2), 10-26. https://doi.org/10.5281/zenodo.15189177

IJFEA 5(2)10-26Download

© 2025 The Author(s). International Journal of Financial Economics and Accounting published by ACADEMIC INK REVIEW.

Categories: