The Impact of Accounting Conservatism on Financial Stability: An Applied Study on a Sample of Algerian Banks

Abstract

This study aimed to examine the impact of accounting conservatism on the financial stability of a sample of Algerian banks during the period 2011-2019, The (Z-Score (model was used to measure financial stability and the ratio of accruals to earnings before extraordinary items (TACC/EXBT) as per (Jain and Rezaee, 2004) model was used to measure accounting conservatism. The study found that there is a significant positive relationship between accounting conservatism and financial stability in a sample of Algerian banks, where the cautious accounting policies adopted by the banks have reduced financial risks and, therefore, increased levels of financial stability