The Impact of the Application of Fair Value Accounting on Asset Quality in Libyan Commercial Banks

Abstract

The study aims to identify the impact of applying fair value accounting on asset quality in Libyan commercial banks. The descriptive-analytical method was used to achieve the objectives of the study. A questionnaire was relied upon to collect data from the study population, represented by employees working in the banking sector in Sirte, Libya  , Fifty questionnaires were distributed to the targeted sample , The study concluded several important results, most notably that there is a statistically significant positive impact of applying fair value accounting on each of the non-performing loan ratio, capital to asset ratio, and return on assets , The study recommended several recommendations, most importantly the necessity for banks to adopt international accounting standards for fair value accounting to help them achieve integration, comparability between financial data, and enhance transparency and confidence in financial performance , It also recommended training and qualifying accounting professionals in asset valuation skills and techniques according to the requirements of fair value accounting standards. The necessary infrastructure, human resources, and financial support must be provided to effectively implement fair value accounting standards , Regulatory bodies should be encouraged to issue legislation and guidelines that support implementing fair value accounting standards. Credit policies should include clear guidelines for evaluating and classifying loans using fair value accounting techniques to determine appropriate provisions for non-performing loans