The effect of risk committee characteristics on banks' asset quality: The moderating role of IFRS9 | ||||
| المجلة العلمية للدراسات المحاسبية | ||||
| Volume 7, Issue 2, April 2025, Page 772-813 PDF (824.92 K) | ||||
| Document Type: المقالة الأصلية | ||||
| DOI: 10.21608/sjar.2025.431740 | ||||
 View on SCiNiTO | ||||
| Authors | ||||
Doaa Abd-El fattah Shehata  1; Emad Sayed 2; Shaimaa Saeed Mohamed 3
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| 1Department of Accounting, Faculty of Commerce, Cairo University, Cairo, Egypt | ||||
| 2Department of Accounting, Faculty of Commerce, Cairo University, Cairo, Egypt and Business College, Imam Mohammad Ibn Saud Islamic University (IMSIU), Riyadh, Saudi Arabia | ||||
| 3Department of Accounting, Faculty of Commerce, Cairo University, Cairo Egypt | ||||
| Abstract | ||||
| Purpose- The purpose of this study is to investigate the association between the characteristics of the risk committee (RC) and banks' asset quality. In addition, we will investigate the impact of IFRS9 on this relationship. Design/methodology/approach- The data was obtained from banks' annual reports. The panel data was used for 27 banks registered at the Egyptian Central Bank (ECB) from 2017 to 2022. The research hypotheses were tested using panel corrected standard errors (PCSE). Findings – The results show that first, Egyptian banks with a greater number of risk committee meetings and more independent directors on the risk committee have a low level of NPLs and an improvement in their asset quality. Second, applied IFRS9 supports the negative effect of RC meetings and RC independence on NPLs. Third, IFRS9 supports the notion that a larger risk committee helps to better credit risk governance, resulting in lower NPLs (higher level of banks' asset quality). Fourth, IFRS9 supports the premise that increased gender diversity on the risk committee leads to better oversight and risk assessment, which leads to lower NPLs and higher banks' asset quality. limitations –The very small sample size of this study is one of its limitations. Furthermore, because of a lack of data, the research excludes other banks' asset quality measures. Practical implications – Our study's findings will help bank managers, investors, and depositors in understanding the significance of risk committees, particularly in emerging economies like Egypt. Furthermore, our findings would help policymakers and regulators (Egyptian central banks) to realize the role of risk committee as one of the important mechanisms of bank governance in supporting the banks' asset quality, improving bank financial stability, and reducing the financial distress, furthermore, it sheds light the consequences of the IFRS9 in banking sector. Third, we believe this is the first study to explore the association between IFRS9, RC characteristics, and banks' asset quality in Egypt. Originality/value- In line with agency theory, this study is a significant addition to the literature on banks' asset quality by exploring how risk committee features affect banks' asset quality in emerging economies. Second, this study extends earlier findings by offering significant additional evidence in emerging markets such as Egypt about the moderating influence of IFR9 on the association between RC characteristics and banks' asset quality. Third, we believe this is the first study to explore the association between IFRS9, RC characteristics, and banks' asset quality in Egypt. | ||||
| Keywords | ||||
| risk committee characteristics; banks' asset quality; IFRS9; Egypt | ||||
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