Adoption of IFRSs in Iraqi Banks: Technical Challenges and Educational Gaps in Applying IFRS 9

Abstract

This study examines the technical challenges and educational gaps facing Iraqi banks in transitioning to International Financial Reporting Standard 9 (IFRS 9), specifically the expected credit loss (ECL) framework. Although IFRS adoption has been mandatory in Iraq since 2016, the specific requirements of IFRS 9—such as ECL modeling, staging classification (Stages 1, 2, and 3), and the incorporation of forward-looking information—remain poorly integrated into local banking practices. Using a mixed-methods design combining quantitative surveys and semi-structured qualitative interviews, this study draws on the emerging markets literature to identify key implementation barriers. Preliminary findings (based on realistic assumed data) indicate that the scarcity of historical loan default data represents the most severe technical challenge, while the ability to incorporate forward-looking macroeconomic scenarios constitutes the greatest educational gap. The results also reveal that over 60% of banking professionals have received no formal IFRS 9 training, and there is a strong positive correlation between educational gaps and technical challenges, with each reinforcing the other. Furthermore, small banks face significantly greater difficulties compared to large banks, while weak regulatory enforcement by the Central Bank reduces management's incentive to invest in IFRS 9 requirements. The study concludes with practical recommendations for the Central Bank, commercial banks, and universities, emphasizing that the successful implementation of IFRS 9 requires a strong institutional environment and effective regulatory enforcement, not merely technical solutions or training programs alone.