Loan Loss Provision: Some Empirical Evidence for Italian Banks

Caporale, Guglielmo Maria; Alessi, Matteo; Colli, Stefano Di; Lopez, Juan Sergio

doi:10.2139/ssrn.2591834

Cited by 3 publications

(3 citation statements)

References 17 publications

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“…One, the study extends the literature that investigates bank income smoothing under country-specific and cross-country contexts (e.g. Adzis et al, 2016;Caporale et al, 2015;Andries et al, 2017;El Sood, 2012;Kilic et al, 2013;Bushman and Williams, 2012). This paper adds to this literature by examining the income smoothing characteristics of banks in each country separately to identify distinct characteristics that differ between the countries.…”

Section: Bank Earnings Managementmentioning

confidence: 76%

“…Ozili (2017) find evidence that discretionary provisioning by Western European banks is driven by income smoothing incentives in the post-financial crisis period, particularly, among listed banks. Caporale et al (2015) examine the main determinants of loan loss provisions for Italian banks and find that LLP in Italian banks is driven mainly by non-discretionary components of loan loss provision, especially during the recession of 2008-2012. Ozili and Outa (2018) examine the determinants of the use of loan loss provisions to smooth income by banks in South Africa.…”

Section: Literature Reviewmentioning

confidence: 99%

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Bank earnings management using loan loss provisions: comparing the UK, France, South Africa and Egypt

Ozili¹

2021

JEAS

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PurposeThis paper aims to investigate bank earnings management using loan loss provision. The paper examines income smoothing, which is a type of earnings management. It compares the income smoothing behaviour of banks in the UK, France, South Africa and Egypt.Design/methodology/approachThe study uses the panel fixed effect regression methodology to analyse bank income smoothing.FindingsThe findings show that bank income smoothing is present in the UK and Egypt and absent in France and South Africa. Banks in Egypt used LLPs to smooth income before the global financial crisis. Meanwhile, bank income smoothing is pronounced in France during and after the financial crisis but was absent in the pre-crisis period. Also, bank income smoothing is reduced in countries that (1) have strict banking supervision, (2) adopt common law particularly the United Kingdom, and by countries that adopt civil law, particularly France and Egypt. Bank earnings management is greater in countries that (3) adopt a mixed legal system, particularly South Africa, and in countries that adopt International Financial Reporting Standards accounting standards.Research limitations/implicationsThe implication of the findings is that country differences may affect banks' incentive to smooth income using loan loss provision.Originality/valueThe novelty of this paper is that it explicitly analyses specific countries that have different supervisory regimes, different structure and accounting rules.

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Section: Bank Earnings Managementmentioning

confidence: 76%

Section: Literature Reviewmentioning

confidence: 99%

Bank earnings management using loan loss provisions: comparing the UK, France, South Africa and Egypt

Ozili¹

2021

JEAS

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“…. ‫ح‬ ‫تح‬ ‫د‬ ‫ث‬ ‫لر‬ ‫رتحث‬ ‫د‬ ‫ا‬ ‫دخػ،ح‬ ‫ح‬ ‫د‬ ‫ح‬ ‫داحن‬ ‫س‬ (Abdelsalam et al,2016;Soedarmono et al, 2017;Ozili & outa., 2017;Quttainah et al, 2013;Farook et al, 2014 ) As cited in Barghathi,2014 ( 5 ) As cited in Barghathi,2014 ‫دخبح‬ ‫د‬ ‫د‬ ‫حف‬ ‫د‬ ‫د‬ ‫د‬ ‫كط‬ (Allen & saunders,1992 (Cornett etal., 2009;Gombola et al,2016;Curcio et al,2017 ;Soedarmono et al, Bushman and Williams,2012 ;Kilic et al, 2013;Curcio et al, 2014 ;Norden and Stoian,2014;Skala, 2015;Wu et al .,2016;Abdul Adzis et al, 2016;Gerald, 2017 (Soedarmono et al, 2017;Ozili, 2017 (b) ; Koch et al, 2017;Caporale et al, 2015;Packer & Zhu, 2012;Agenor & Ziberman, 2015;Olszak et al, 2016 (Quttainah et al, 2013;Farook et al, 2014;Hamdi & Zarai, 2014;Abdelsalam et al,2016;Soedarmono et…”

Section: ‫البحث‬ ‫ملخص‬mentioning

confidence: 99%

دراسة مقارنة لممارسات إدارة الأرباح بين البنوك العاملة فى المنطقة العربية

عبد الرازق

2024

مجلة الاسکندرية للبحوث المحاسبية

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The paper aims to investigate the effect of the bank type (conventional vs.Islamic banks) on the level of earning management in conventional vs. Islamic listed banks in Arab region using a sample contains 204 bank-year observations over the period (2012:2017), in addition to use (jones, 1991) discretionally accruals model that modified by (Yasuda et al.,2004(. we don't find statically significant evidence that conventional and Islamic banks use discretionally accruals earning management opportunistically.

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The Impact of Earnings variability and Regulatory Measures on Income Smoothing: Evidence from Panel Regression

Malik

Aziz²,

Saiti

et al. 2021

Journal of Central Banking Theory and Practice

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This study investigates the impact of variability in earnings, stringent regulatory measures and the trend of extending loans while keeping in view deposit ratio on income smoothening practices for a sample of 20 commercial banks listed on the Pakistan Stock Exchange (PSX) from the year 2010 to 2017. The likelihood of smoothing activities is measured through its widely used proxy, i.e. loan loss provisions (LLPs). Moreover, earnings before tax and provisions (EBTP) and loan to deposit ratio (LD) have been incorporated to determine the impact of earnings and loans to deposit ratio on income smoothening. We find that commercial banks are less likely to manage earnings through smoothening practices, which shows that commercial banks adhere to regulatory restrictions. This is further supported by the fact that income smoothing activities decrease as a result of the increase in capital adequacy ratios after the imposition of stringent rules, which exert greater regulatory pressure on banks, whereas the pace of income smoothing increases as a result of an increase in loans to deposit ratio, which reveals that banks take credit risk but manage within the ambit of regulatory restrictions. Based on the findings, we argue that the imposition of regulatory restrictions through the State Bank of Pakistan (SBP) has not only discouraged income smoothening through loan loss provisions but also enhances reporting quality. The results of this study provide useful insights for investors, creditors and stakeholders.

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Loan Loss Provision: Some Empirical Evidence for Italian Banks

Cited by 3 publications

References 17 publications

Bank earnings management using loan loss provisions: comparing the UK, France, South Africa and Egypt

Bank earnings management using loan loss provisions: comparing the UK, France, South Africa and Egypt

دراسة مقارنة لممارسات إدارة الأرباح بين البنوك العاملة فى المنطقة العربية

The Impact of Earnings variability and Regulatory Measures on Income Smoothing: Evidence from Panel Regression

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