Accounting discretion, loan loss provisioning, and discipline of Banks' risk-taking

被引:368
作者
Bushman, Robert M. [2 ]
Williams, Christopher D. [1 ]
机构
[1] Univ Michigan, Ross Sch Business, Ann Arbor, MI 48109 USA
[2] Univ N Carolina, Kenan Flagler Business Sch, Chapel Hill, NC 27515 USA
关键词
Smoothing; Loan loss provisions; Discretion; Risk; Banks; DEPOSIT INSURANCE; EARNINGS MANAGEMENT; CAPITAL MANAGEMENT; COMMERCIAL-BANKS; MORAL HAZARD; DETERMINANTS; INFORMATION;
D O I
10.1016/j.jacceco.2012.04.002
中图分类号
F8 [财政、金融];
学科分类号
0202 ;
摘要
Examining banks across 27 countries, we estimate two measures of the forward-looking orientation reflected in discretionary loan provisioning practices within a country. We document that forward-looking provisioning designed to smooth earnings dampens discipline over risk-taking, consistent with diminished transparency inhibiting outside monitoring. In contrast, forward-looking provisioning reflecting timely recognition of expected future loan losses is associated with enhanced risk-taking discipline. Thus, proposals to change loan loss accounting embed significant risks of unintended consequences, as gains from reducing pro-cyclicality may be swamped by losses in transparency that dampen market discipline and increase the scope for less prudent risk-taking by banks. (C) 2012 Elsevier B.V. All rights reserved.
引用
收藏
页码:1 / 18
页数:18
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