Abstract:
This paper studies the determinants of loan loss provision and the behavior of income smoothing of China’s different types of commercial banks. Our results indicate We find that current loan loss provisions are positively related to the change of non-performing loans of next period and are used for income smoothing. Both city commercial banks and non-listed banks have a stronger incentive to smooth their income through loan loss provisions. Meanwhile, compared with non - listed city banks with bond issues, non-listed city banks without bond demonstrate significant income-smoothing behavior. Non-listed city commercial banks with bond issuance or more bond issues are more likely to use loan loss provision for income smoothing. In addition, the implementation of new accounting standards does not significantly affect banks’ income-smoothing behavior.
陈超, 魏静宜, 曹利. 中国商业银行通过贷款损失准备计提进行盈余平滑吗?[J]. 金融研究, 2015, 426(12): 46-63.
CHEN Chao, WEI Jingyi, CAO Li. Do China’s Commercial Banks Use Loan Loss Provision for Income Smoothing?. Journal of Financial Research, 2015, 426(12): 46-63.
Ahmed, A. S., C. Takeda and S. Thomas, 1999, “Bank Loan Loss Provisions: A Reexamination of Capital Management, Earnings Management and Signaling Effects”, Journal of Accounting and Economics, 28, pp. 1~25.
[4]
Beatty, A. L., Bin Ke and R. Petroni, Kathy, 2002, “Earnings Management to Avoid Earnings Declines across Publicly and Privately Held Banks” The Accounting Review 77(3), pp. 547~570.
[5]
Beatty, A. and S. Liao, 2011, “Do Delays in Expected Loss Recognition Affect Banks' Willingness to Lend?”, Journal of Accounting and Economics, 52(1), pp. 1~20.
[6]
Beaver, W., C. Eger, S. Ryan and M. Wolfson, 1989, “Financial Reporting, Supplemental Disclosures, and Bank Share Prices”, Journal of Accounting Research, 27(2), pp. 157~178.
[7]
Beaver, W. and E. Engel, 1996, “Discretionary Behavior with Respect to Allowances for Loan Losses and the Behavior of Security Prices”, Journal of Accounting and Economics, 22, pp. 177~206.
[8]
Bushman, R. M. and C. D. Williams, 2012,“Accounting Discretion, Loan Loss Provisioning, and Discipline of Banks’ Risk-taking”,Journal of Accounting and Economics, 54(1),pp. 1~18.
[9]
Collins, J., D. Shackelford and J. Whalen, 1995, “Bank Differences in the Coordination of Regulatory Capital, Earnings, and Taxes”, Journal of Accounting Research, 33(2), pp. 263~291.
[10]
Fonseca, A. and F. Gonzalez, 2008, “Cross-country Determinants of Bank Income Smoothing by Managing Loan-loss Provisions”, Journal of Banking & Finance 32(2), pp. 217~228.
[11]
Greenawalt, M. and Jr. Sinkey, 1988, “Bank Loan-loss Provisions and the Income-smoothing Hypothesis: An Empirical Analysis, 1976–1984”, Journal of Financial Services Research,1(4), pp. 301~318.
[12]
Healy P. M., 1985, “The Effects of Bonus Schemes on Accounting Decisions”, Journal of Accounting and Economics, 7(1/2/3) pp. 85~107.
[13]
Kanagaretnam, K. and G. Lobo, 2003, “Managerial Incentives for Income Smoothing through Bank Loan Loss Provisions”. Review of Quantitative Finance and Accounting , 20(1), pp. 63~80.
[14]
Kanagaretnam, K. and G. Lobo, 2004, “Joint Tests of Signaling and Income Smoothing through Bank Loan Loss Provision”, Contemporary Accounting Research, 21(4), pp. 843~884.
[15]
Kanagaretnam, K., G. V. Krishnan and G. Lobo, 2010, “An Empirical Analysis of Auditor Independence in the Banking Industry”, The Accounting Review, 85(6), pp. 2011~2046.
[16]
Laeven, L. and G. Majnoni, 2003, “Loan Loss Provisioning and Economic Slowdowns: Too Much, Too Late? ” Journal of Financial Intermediation, 12(2), pp. 178~197.
[17]
Liu, C. C. and S. G. Ryan, 2006, “Income Smoothing over the Business Cycle: Changes in Banks' Coordinated Management of Provisions for Loan Losses and Loan Charge-offs from the Pre-1990 Bust to the 1990s Boom”, The Accounting Review, 81(2), pp. 421~441.
[18]
Nichols, D., J. Wahlen and M. Wieland, 2009, “Publicly-traded Versus Privately-held: Implications for Bank Profitability, Growth Risk, and Accounting Conservatism” Review of Accounting Studies, 14(1), pp. 88~122.