Ozili, Peterson K (2020): Bank loan loss provisioning during election years: cross-country evidence.
This is the latest version of this item.
Preview |
PDF
MPRA_paper_103196.pdf Download (734kB) | Preview |
Abstract
I examine bank loan loss provisioning behaviour during election years - focusing on the effect of elections on banking sector loan loss provisioning. The findings reveal that the banking sectors in developed countries have higher loan loss provisions in election years. Income smoothing is present in election years which supports the income smoothing hypothesis. Also, banking sectors with high capital levels have higher loan loss provisions. Although there were no significant differences in bank loan loss provisioning during election years across the four bloc, the EU banking sectors and the banking sectors of BIS member-countries generally have higher loan loss provisions while the non-EU banking sectors and the banking sectors of the G7 member-countries generally have fewer loan loss provisions.
Item Type: | MPRA Paper |
---|---|
Original Title: | Bank loan loss provisioning during election years: cross-country evidence |
Language: | English |
Keywords: | loan loss provisions; income smoothing; election; banks; credit risk, nonperforming loans, institutional factors, corruption, |
Subjects: | G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages G - Financial Economics > G2 - Financial Institutions and Services > G28 - Government Policy and Regulation M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M4 - Accounting and Auditing M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M4 - Accounting and Auditing > M42 - Auditing M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M4 - Accounting and Auditing > M48 - Government Policy and Regulation |
Item ID: | 103196 |
Depositing User: | Dr Peterson K Ozili |
Date Deposited: | 30 Sep 2020 13:30 |
Last Modified: | 30 Sep 2020 13:30 |
References: | Anandarajan, A., Hasan, I., & McCarthy, C. (2007). Use of loan loss provisions for capital, earnings management and signalling by Australian banks. Accounting & Finance, 47(3), 357-379. Balla, E., & Rose, M. J. (2015). Loan loss provisions, accounting constraints, and bank ownership structure. Journal of Economics and Business, 78, 92-117. Bikker, J. A., & Metzemakers, P. A. (2005). Bank provisioning behaviour and procyclicality. Journal of international financial markets, institutions and money, 15(2), 141-157. Borsuk, M. (2019). Forecasting the Net Interest Margin and Loan Loss Provision Ratio of Banks in Various Economic Scenarios: Evidence from Poland. Russian Journal of Money and Finance, 78(1), 89-106. Bratten, B., Causholli, M., & Myers, L. A. (2017). Fair value exposure, auditor specialization, and banks’ discretionary use of the loan loss provision. Journal of Accounting, Auditing & Finance, 0148558X17742567. Bushman, R. M., & Williams, C. D. (2012). Accounting discretion, loan loss provisioning, and discipline of banks’ risk-taking. Journal of accounting and economics, 54(1), 1-18. Callen, M., & Long, J. D. (2015). Institutional corruption and election fraud: Evidence from a field experiment in Afghanistan. American Economic Review, 105(1), 354-81. Caporale, G. M., Alessi, M., Di Colli, S., & Lopez, J. S. (2018). Loan loss provisions and macroeconomic shocks: Some empirical evidence for italian banks during the crisis. Finance Research Letters, 25, 239-243. Cohen, L. J., Cornett, M. M., Marcus, A. J., & Tehranian, H. (2014). Bank earnings management and tail risk during the financial crisis. Journal of Money, Credit and Banking, 46(1), 171-197. Cristini, M., Moya, R., & Powell, A. (2001). The importance of an effective legal system for credit markets: the case of argentina. Bid (Banco Interamericano de Desarrollo). Cummings, J. R., & Durrani, K. J. (2016). Effect of the Basel Accord capital requirements on the loan-loss provisioning practices of Australian banks. Journal of Banking & Finance, 67, 23-36. Curcio, D., & Hasan, I. (2015). Earnings and capital management and signaling: the use of loan-loss provisions by European banks. The European Journal of Finance, 21(1), 26-50. Dupas, P., & Robinson, J. (2012). The (hidden) costs of political instability: Evidence from Kenya's 2007 election crisis. Journal of Development Economics, 99(2), 314-329. El Sood, H. A. (2012). Loan loss provisioning and income smoothing in US banks pre and post the financial crisis. International Review of Financial Analysis, 25, 64-72. Fonseca, A. R., & Gonzalez, F. (2008). Cross-country determinants of bank income smoothing by managing loan-loss provisions. Journal of Banking & Finance, 32(2), 217-228. Gambetta, N., García-Benau, M. A., & Zorio-Grima, A. (2016). Data analytics in banks' audit: The case of loan loss provisions in Uruguay. Journal of Business Research, 69(11), 4793-4797. Ghosh, S. (2016). Political transition and bank performance: how important was the Arab Spring? Journal of Comparative Economics, 44(2), 372-382. Gibson, J. L., Caldeira, G. A., & Spence, L. K. (2003). The Supreme Court and the US presidential election of 2000: Wounds, self-inflicted or otherwise? British Journal of Political Science, 33(4), 535-556. Goel, R. K., & Hasan, I. (2011). Economy-wide corruption and bad loans in banking: international evidence. Applied Financial Economics, 21(7), 455-461. Jin, J., Kanagaretnam, K., & Lobo, G. J. (2018). Discretion in bank loan loss allowance, risk taking and earnings management. Accounting & Finance, 58(1), 171-193. Kanagaretnam, K., Lobo, G. J., & Yang, D. H. (2005). Determinants of signaling by banks through loan loss provisions. Journal of Business Research, 58(3), 312-320. Kilic, E., Lobo, G. J., Ranasinghe, T., & Sivaramakrishnan, K. (2012). The impact of SFAS 133 on income smoothing by banks through loan loss provisions. The Accounting Review, 88(1), 233-260. Laeven, L., & Majnoni, G. (2003). Loan loss provisioning and economic slowdowns: too much, too late? Journal of financial intermediation, 12(2), 178-197. Leventis, S., Dimitropoulos, P. E., & Anandarajan, A. (2011). Loan loss provisions, earnings management and capital management under IFRS: The case of EU commercial banks. Journal of financial services research, 40(1-2), 103-122. Leventis, S., Dimitropoulos, P. E., & Anandarajan, A. (2012). Signalling by banks using loan loss provisions: the case of the European Union. Journal of Economic Studies, 39(5), 604-618. Marton, J., & Runesson, E. (2017). The predictive ability of loan loss provisions in banks–Effects of accounting standards, enforcement and incentives. The British Accounting Review, 49(2), 162-180. Morris, R. D., Kang, H., & Jie, J. (2016). The determinants and value relevance of banks' discretionary loan loss provisions during the financial crisis. Journal of Contemporary Accounting & Economics, 12(2), 176-190. Murcia Pabón, A., & Kohlscheen, E. (2016). Moving in tandem: bank provisioning in emerging market economies. Olszak, M., Pipień, M., Kowalska, I., & Roszkowska, S. (2017). What drives heterogeneity of cyclicality of loan-loss provisions in the EU? Journal of Financial Services Research, 51(1), 55-96. Ozili, P. K., & Outa, E. (2017). Bank loan loss provisions research: a review. Borsa Istanbul Review, 17(3), 144-163. Ozili, P. K. (2015). Loan loss provisioning, income smoothing, signaling, capital management and procyclicality: does IFRS matter? Empirical evidence from Nigeria. Mediterranean Journal of Social Sciences, 6(2), 224-232. Ozili, P. K. (2018). Bank loan loss provisions, investor protection and the macroeconomy. International Journal of Emerging Markets, 13(1), 45-65. Ozili, P. K., & Outa, E. R. (2018). Bank income smoothing in South Africa: role of ownership, IFRS and economic fluctuation. International Journal of Emerging Markets, 13(5), 1372-1394. Ozili, P. K. (2019a). Bank income smoothing, institutions and corruption. Research in International Business and Finance, 49, 82-99. Ozili, P. K. (2019b). Bank loan loss provisions, risk-taking and bank intangibles. Afro-Asian Journal of Finance and Accounting, 2019 Vol.9 No.1, pp.21 - 39 Wang, Z., Xie, N., & Jin, Y. (2019). Do Loan Loss Provisions Affect the Credit Fluctuations in China’s Banking System? Emerging Markets Finance and Trade, 55(11), 2425-2436. Wheeler, P. B. (2019). Loan loss accounting and procyclical bank lending: The role of direct regulatory actions. Journal of Accounting and Economics. |
URI: | https://mpra.ub.uni-muenchen.de/id/eprint/103196 |
Available Versions of this Item
-
Bank loan loss provisioning during election years: cross-country evidence. (deposited 22 Oct 2019 13:31)
- Bank loan loss provisioning during election years: cross-country evidence. (deposited 30 Sep 2020 13:30) [Currently Displayed]