Suitability and Relevance of the Fair Value Measurement Under IFRS 13 Vs Historical Cost: Application to the Lebanese Banking Sector

The aim of this research is to discover the opinions of the Lebanese banks regarding the relevance of the fair value method. Furthermore, this study will provide an additional insight into the suitability of the fair value measurement in a developing economy like that of Lebanon, and in an absence of an active financial market. For the benefit of this deductive research, a quantitative methodology was solely employed. Using a questionnaire of 14 questions measured with a Likert Scale (pre-coded questions), and a sample of 61 Lebanese Banks, the data was collected through a combination of some self-administered surveys, and some in person questionnaire-style interviews. The collected data was subjected to statistical tests using SPSS software. The main results showed that Lebanese banks consider the fair value measurement under IFRS 13 relevant compared to the traditional historical cost method. Nevertheless, the relevance of fair value in times of financial turbulence differs from its relevance in times of financial stability. Bearing in mind the limitedness of research on this topic in Lebanon, this paper offers a significant contribution to the field. Upcoming studies will build on this analysis with the help of a larger sample. In addition, Lebanese banks will become more aware about the importance of the switch to the fair value method compared to the historical cost, and will seek to enhance their maturity level in this vein and to imitate international banks’ financial disclosures.