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THE IMPACT OF THE FORWARD-LOOKING EXPECTED LOSS METHOD REFERS TO FINANCIAL ACCOUNTING STANDARD NO. 71 ON EARNINGS QUALITY OF THE INDONESIAN ISLAMIC BANKS

This research investigates the effect of applying the forward-lookingexpected loss method as a consequence of Financial AccountingStandard (FAS) No 71 on earnings quality. Since the technique iseffective in 2020, forward-looking expected loss is measured using loan loss provisions ratio with a year dummy to differentiate forward-lookingand non-forward-looking. At the same time, the predictability ofearnings is used as a proxy of earnings quality. The sample consists of16 Shariah commercial banks from 2018 to 2021, resulting in 55 firmyears as a unit of analysis. Using panel data regression, the resultsshow that the higher the reserve for impairment loss of Islamic banks,the lower the quality of earnings. However, after the implementation ofSFAS 71, the higher the reserve, the higher the earnings quality, provenby the ability of earnings to predict future earnings.

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SIL2685-1059
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Detail Information
Series Title
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Call Number
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Publisher
Nusa Teggara Barat : AKURASI : Jurnal Studi Akuntansi dan Keuangan.,
Collation
pp.35 - 50
Language
English
ISBN/ISSN
2685-1059
Classification
NONE
Content Type
-
Media Type
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Carrier Type
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Edition
Vol. 7(1), 2024
Subject(s)
Covid-19
Shariah Commercial Bank
earnings predictability
expected loss
Specific Detail Info
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Statement of Responsibility
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