The Impact of Accounting Information Relevance on the Effectiveness of the CAMELS Model in Predicting Financial Failure in Light of the Moderating Role of International Financial Reporting Standards and Geopolitical Tensions an Applied Study on Yemeni Banks (2015–2021)

Purpose: The first objective of this study is to analyze the impact of accounting information relevance on the effectiveness of the CAMELS model in predicting financial failure. Second, the study analyzes the impact of the moderating role of International Financial Reporting Standards (IFRS) and geopolitical tensions on the relationship between accounting information relevance and the effectiveness of the CAMELS model in predicting financial failure.
Design/Methodology/Approach: To achieve the study's objective, the researcher conducted an applied study on a sample of banks operating in Yemen during the period from 2015 to 2021. Manual content analysis was used to analyze the banks' financial reports, and multiple regression analysis was employed to test the study's hypotheses using statistical software.
Findings: The study found a statistically significant effect of accounting information relevance on the effectiveness of using the CAMELS model. The study also found a statistically significant effect of compliance with IFRS application requirements on the relevance of accounting information. Furthermore, there is a statistically significant effect of the interaction index between geopolitical tension risks and the level of information asymmetry on the effectiveness of using the CAMELS model. In addition, there is a statistically significant effect of the interaction index between compliance with IFRS requirements and the level of information asymmetry, as a measure of relevance, on the effectiveness of using the CAMELS model. Finally, there is a statistically significant effect of the effectiveness of using the CAMELS model on the level of financial failure.
Practical Implications: The findings recommend that bank management and other policymakers take into account the effect of bank size when formulating financial soundness policies, in order to ensure an optimal level of financial soundness for banks with the aim of improving their financial performance, as well as applying IFRS to enhance the qualitative characteristics of accounting information and, in turn, improve the effectiveness and efficiency of the CAMELS model in predicting financial failure.
Originality/Value: This study represents a significant development in the field of banking governance, as it is—to the researcher's knowledge—the first study of its kind to address the impact of accounting information relevance on the effectiveness of the CAMELS model in predicting financial failure in light of the moderating role of IFRS and geopolitical tensions.

Accounting information relevance, CAMELS model, financial failure, International Financial Reporting Standards

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