Factors that influenced the adoption of IFRS by Islamic banks in the UAE

Abstract

Purpose This paper aims to investigate the factors that influenced the current adoption of the international financial reporting standards (IFRS) by Islamic banks in the UAE. This paper examined the relationship between the theoretical aspects and practical components of the research investigation regarding the factors that influence the adoption of IFRS. This paper will contribute to the existing knowledge and practices in not only Islamic countries but also Western countries in terms of a deeper understanding of the adoption of IFRS by the Islamic banks and how the factors could influence the Islamic banking adoption, process, activities and financial reporting. Design/methodology/approach Several theories of regulation were considered in this paper to explain the existence of Islamic accounting regulations and understand why some of the Islamic accounting prescriptions became formal regulations, while others did not. Data was collected for this purpose by conducting a survey with professionals and managers of four Islamic banks in the UAE. Findings This paper revealed that factors, such as religion, culture and local investors, may have limited influence on the current adoption of accounting standards in the Islamic banks. Furthermore, this paper uncovered a concern among respondents of issues that developed when Islamic banks commenced the adoption of IFRS. This paper also indicated that respondents’ opinion does not reflect a perception that all IFRS are suitable for the application of Shariah transactions. Originality/value This study is unique as no study has yet explored the factors that influenced the adoption of the IFRS by Islamic banks in the UAE.

IAS/IFRS in Jordan: Adoption, Implementation and Determinants

“…This result is in line with the argument of Ionaşcu et al [68] and the findings of several prior studies [e.g. 56,57,61,62,78,64,63]. Similarly, the results also show a positive and significant (t= 2.288, p= 0.026) relationship between LOLEBO and ADLEVL.…”

“…In the same context, Damak -Ayadi, Sassi and Bahri [63] found that foreign aid has a major impact on IFRS adoption. Similarly, Sharairi [64] found that international institutional pressure is also an important and critical factor in adoption IFRS. Based on the above discussion, it can be hypothesized that:…”

“…Burnett et al [70] found that larger Canadian firms with legal enforcement power have been interested in applying IFRS. Sharairi [64] found that local institutions have significantly contributed to the adopting of IFRS by Islamic banks. Damak-Ayadi, Sassi and Bahri [63] also found that legal enforcement power has positively and significantly impacted the accounting standards adoption.…”

Transition to the Revised OHADA Law on Accounting and Financial Reporting: Corporate Perceptions of Costs and Benefits

“…Several studies have been carried out in different parts of the world on the benefits of IFRS and on the perception of accounting practitioners on the transition and convergence to the IFRS (Mohamed et al 2019;Dabbicco and Mattei 2020;Albu et al 2020;Ntoung et al 2020;Muraina 2020;Sharairi 2020;Joshi et al 2008;Ionascu et al 2014).…”

“…Specifically, IPSAS has improved the level of accountability, which in turn improved Nigeria's financial reporting quality. Sharairi (2020) investigated the factors that influenced the current adoption of the International Financial Reporting Standards (IFRS) by Islamic banks in the UAE. This paper examined the relationship between the theoretical aspects and practical components.…”