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The Value Relevance of Banking Loans

In: Trends, Issues, and Challenges in Banking and Finance

Author

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  • Federico Beltrame
  • Marco Boso
  • Gianni Zorzi

    (University of Udine)

  • Maurizio Polato

Abstract

The aim of this chapter is to test the value relevance of IFRS 9, in comparison to its predecessor, the IAS 39 accounting standard, both on an overall and bank loans level. In order to do this, we investigate a sample of 139 European banks. Results highlight that both principles are shown to be value relevant. However, the introduction of IFRS 9 can be linked with an increased ability to explain market stock price compared to IAS 39, but exclusively at the individual loans level. Moreover, the significance of this finding is comparatively better when considering equity-strong countries. Inside this framework, the classic net income information is price relevant only within the EU 15 countries, as well as in the aforementioned equity-strong countries. This indicates that net income can be deemed as value relevant only in countries where accounting standard are applied in a more accurate way, as well as where more value relevance is considered more important by investors.

Suggested Citation

  • Federico Beltrame & Marco Boso & Gianni Zorzi & Maurizio Polato, 2025. "The Value Relevance of Banking Loans," Palgrave Macmillan Studies in Banking and Financial Institutions, in: Enzo Scannella & Jonathan Williams (ed.), Trends, Issues, and Challenges in Banking and Finance, chapter 6, pages 127-147, Palgrave Macmillan.
    • Handle: RePEc:pal:pmschp:978-3-031-96066-6_6
    DOI: 10.1007/978-3-031-96066-6_6
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