An analysis of loan loss provisioning behaviour in Vietnamese banking

Bryce, Cormac; Dadoukis, Aristeidis; Hall, Maximilian J.B.; Nguyen, Linh; Simper, Richard

doi:10.1016/j.frl.2015.05.014

Cited by 20 publications

(20 citation statements)

References 34 publications

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“…Also, Curcio et al (2014) find that Chinese banks smooth income during the financial crisis. However, Bryce et al (2015) find that Vietnamese banks did not engage in income smoothing. The results are mixed among Asian studies, and these studies did not consider the role of socio-political factors in influencing bank income smoothing.…”

Section: Regional Comparisonmentioning

confidence: 83%

Bank income smoothing, institutions and corruption

Ozili¹

2019

Research in International Business and Finance

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This study investigates bank income smoothing, focusing on the effect of corruption on the extent of income smoothing by African banks. I find that banks use loan loss provisions to smooth positive (nonnegative) earnings particularly in the post-2008 crisis period and this behaviour is reduced by strong investor protection. Also, I find that banks in highly corrupt environments smooth their positive (nonnegative) earnings as opposed to smoothing the entire profit distribution. Finally, crosscountry variation in bank income smoothing is observed. The findings have implications.

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Section: Regional Comparisonmentioning

confidence: 83%

Bank income smoothing, institutions and corruption

Ozili¹

2019

Research in International Business and Finance

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“…In Vietnam, Bryce et al (2015) test the income smoothing, capital management and the cyclical hypotheses and did not find evidence for the use of LLPs to smooth income among Vietnamese banks. In Turkey, Acar and Ipci (2015) investigate the role of LLPs in capital and earnings management in the Turkish banking sector during the 2005e2011 period.…”

Section: Basel IIImentioning

confidence: 87%

Bank Loan Loss Provisions Research: A Review

Ozili¹,

Outa

2017

SSRN Journal

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We review the recent academic and policy literature on bank loan loss provisioning (LLP) to identify several advances in the literature, to highlight some challenges in LLP research and suggest possible directions for future research with some concluding remarks. Among other things, we observe some major advancement in country-specific and cross-country analyses and substantial interaction between LLPs and existing prudential, accounting, institutional firm characteristic, cultural, religious, tax and fiscal framework. We observe that managerial discretion in provisioning does not necessarily generate LLP estimates that reflect the true and underlying economic reality of banks' credit risk exposure but rather managerial discretion in provisioning is strongly linked to income smoothing, capital management, signalling and other objectives. We also address several issues including the ethical dimensions of income smoothing, motivations and constrains to income smoothing, methodological issues in the bank loan loss provisions literature and the dynamic loan loss provisioning experiment. Moreover, we suggest several avenues for further research such as: finding a balance between sufficient LLPs which regulators want versus transparent LLPs which standard setters want; the sensitivity of abnormal (specific and general) LLPs to changes in equity; the persistence of abnormal LLPs following CEO exit; country-specific interventions that induce LLP procyclicality in emerging countries; investigating LLP behaviour in the post-financial crisis sample period; the impact of Basel III on banks' provisioning discretion; LLP behaviour among systemic and non-systemic financial institutions; etc. We conclude that, because provisioning models are only as good as the assumptions underlying such models as well as the accuracy of the inputs included in such models, regulators need to pay attention to how much discretion banks and lending institutions should have in determining reported provision estimates, and this has been a long standing issue.

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“…In summary, they provided no evidence that to lend support income smoothing hypothesis through LLP. Bryce et al (2015) examined the income-smoothing, capital manage and cyclical management hypotheses on Vietnamese banks during the period 2007-2014, and did not find enough evidence that Vietnamese banks engage in income smoothing activity, but when incorporated the X-efficiency estimates in the model the banks did not exhibit the income smoothing activity.…”

Section: Llp and Income Smoothing Hypothesismentioning

confidence: 99%

“…Also, recent banking literature provide evidence of using LLP to income smoothing such as Leventis et al (2012); El Sood (2012); Kilic et al (2013); Curcio and Hasan (2013); Bouvatier at al. (2014); Olson and Zoubi (2014); Cucinelli (2015); Bryce et al (2015); Adziz et al (2015); Fernando and Ekanayaka (2015); Skala (2015); Caporale et al (2015), Ozili (2015); Olszak et al (2016); Morris et al (2016) and Curcio et al (2017).…”

Section: Introduce the Problemmentioning

confidence: 99%

Loan Loss Provisions, Income Smooth, Signaling, Capital Management and Pro-Cyclicality. Empirical Evidence from Mozambique’s Commercial Banks

Siueia¹,

Wang²

2017

IJEF

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The aim of this study is to provide the first empirical evidence of income smoothing, capital management, signaling, and pro-cyclical behavior through loan loss provisions (LLP) for Mozambican commercial Banks, an example of the under-developed country. A second goal is to understand the bank lending behavior during the Mozambique's hidden public debt crisis. The sample consists of all commercial banks observed during 2010-2016. We provide strong evidence that Mozambican commercial banks are pro-cyclical through LLP and these banks engage in income smoothing activity. However, for capital management activity and signaling behavior, we provide insignificant evidence to support these hypotheses among Mozambican commercial banks via LLP. Also, the result indicates that Mozambique's hidden public debt crisis, the commercial banks put aside more provisions.

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An analysis of loan loss provisioning behaviour in Vietnamese banking

Cited by 20 publications

References 34 publications

Bank income smoothing, institutions and corruption

Bank income smoothing, institutions and corruption

Bank Loan Loss Provisions Research: A Review

Loan Loss Provisions, Income Smooth, Signaling, Capital Management and Pro-Cyclicality. Empirical Evidence from Mozambique’s Commercial Banks

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