Loan Loss Provisions and Bank Lending Behavior: Do Information Sharing and Borrowerss Legal Rights Matter?

2016 ◽  
Author(s):  
Wahyoe Soedarmono ◽  
Amine Tarazi ◽  
Agusman Agusman ◽  
Gary S. Monroe ◽  
Dominic Gasbarro
Keyword(s):  
Information Sharing ◽  
Bank Lending ◽  
Legal Rights ◽  
Loan Loss ◽  
Loan Loss Provisions ◽  
Lending Behavior

scholarly journals Loan Loss Provisions and Lending Behavior of Banks: Do Information Sharing and Borrower Legal Rights Matter?

2015 ◽  
Author(s):  
Wahyoe Soedarmono ◽  
Amine Tarazi ◽  
Agusman Agusman ◽  
Gary S. Monroe ◽  
Dominic Gasbarro
Keyword(s):  
Information Sharing ◽  
Legal Rights ◽  
Loan Loss ◽  
Loan Loss Provisions ◽  
Lending Behavior

scholarly journals Bank loan loss provisions, investor protection and the macroeconomy

2018 ◽  
Vol 13 (1) ◽  
pp. 45-65 ◽  
Author(s):  
Peterson K. Ozili
Keyword(s):  
Investor Protection ◽  
Positive Function ◽  
Bank Lending ◽  
Bank Loan ◽  
Loan Loss ◽  
African Region ◽  
African Countries ◽  
Content Type ◽  
Loan Loss Provisions ◽  
Economic Boom

Purpose The purpose of this paper is to investigate the non-discretionary determinants of bank loan loss provisions in Africa after controlling for macroeconomic fluctuation, financial development and investor protection. Design/methodology/approach The author uses static and dynamic regression estimation to test for the determinants of bank loan loss provisions. Findings The author finds that non-performing loans (NPL), loan-to-asset ratio and loan growth are significant non-discretionary drivers of bank provisions in the African region. The author observes that bank provision is a positive function of NPL up to a threshold beyond which bank provisions will no longer increase as NPL increases. Also, bank loan-to-asset ratio is a significant driver of bank provisions when African banks have higher loan-to-asset ratios. The author finds that larger banks in financially developed African countries have fewer loan loss provisions while increase in bank lending leads to fewer bank provisions in countries with strong investor protection. Finally, higher bank lending is associated with higher bank provisions during economic boom. Originality/value This study is the first to assess the determinants of non-discretionary bank provisions in Africa as part of micro-prudential surveillance of banks in the African region.

scholarly journals Effects of loan loss provisions on growth in bank lending: Some international comparisons

2012 ◽  
Vol 132 ◽  
pp. 91-116 ◽  
Author(s):  
Vincent Bouvatier ◽  
Laetitia Lepetit
Keyword(s):  
International Comparisons ◽  
Bank Lending ◽  
Loan Loss ◽  
Loan Loss Provisions

scholarly journals Effects of loan loss provisions on growth in bank lending : Some international comparisons

2013 ◽  
Vol n° 132 (4) ◽  
pp. 91-116
Author(s):  
Vincent Bouvatier ◽  
Lætitia Lepetit
Keyword(s):  
International Comparisons ◽  
Bank Lending ◽  
Loan Loss ◽  
Loan Loss Provisions

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

2017 ◽  
Vol 9 (11) ◽  
pp. 48 ◽  
Author(s):  
Tito Tomas Siueia ◽  
Wang Jianling
Keyword(s):  
Empirical Evidence ◽  
Public Debt ◽  
Commercial Banks ◽  
Debt Crisis ◽  
Bank Lending ◽  
Income Smoothing ◽  
Capital Management ◽  
Loan Loss ◽  
Management Activity ◽  
Loan Loss Provisions

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.

scholarly journals Credit Information Sharing and Loan Loss Recognition

2021 ◽  
Author(s):  
Karthik Balakrishnan ◽  
Aytekin Ertan
Keyword(s):  
Information Sharing ◽  
Financial System ◽  
Loan Loss ◽  
Nonperforming Loans ◽  
Credit Risks ◽  
Loan Loss Provisions ◽  
Public Credit ◽  
Information Sets

Does enhancing banks' information sets and understanding of credit risks improve loan loss recognition? We study this question using a global dataset of staggered initiations and coverage increases of public credit registries (PCRs). Mandated by national regulators, PCRs collect borrower and loan information from lenders and share it with the banks in the financial system. This setting represents a significant improvement in banks' assessment of loss events. We find that PCR initiations and coverage reforms enhance the timeliness of banks' loan loss recognition-the extent to which loan loss provisions capture subsequent nonperforming loans. The effects are greater when PCRs distribute more information and are not driven by changes in borrower quality or supervisory stringency. Overall, these inferences are consistent with improvements in banks' information sets leading to better provisioning decisions.

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