scholarly journals The Procyclicality of Loan Loss Provisions in Islamic Banks

2016 ◽  
Author(s):  
Wahyoe Soedarmono ◽  
Sigid Eko Pramono ◽  
Amine Tarazi
Keyword(s):  
Islamic Banks ◽  
Loan Loss ◽  
Loan Loss Provisions

Loan loss provisions, bank valuations and discretion: A comparative study between conventional and Islamic banks

2014 ◽  
Vol 103 ◽  
pp. S160-S173 ◽  
Author(s):  
Marwa Elnahass ◽  
Marwan Izzeldin ◽  
Omneya Abdelsalam
Keyword(s):  
Comparative Study ◽  
Islamic Banks ◽  
Loan Loss ◽  
Loan Loss Provisions ◽  
Conventional And Islamic Banks

Loan Loss Provisions, Income Smoothing and Loan Growth: Evidence from Islamic Banks

2016 ◽  
Author(s):  
Sigid Eko Pramono ◽  
Hilda Rosieta ◽  
Wahyoe Soedarmono
Keyword(s):  
Income Smoothing ◽  
Islamic Banks ◽  
Loan Loss ◽  
Loan Loss Provisions ◽  
Loan Growth

scholarly journals Provisioning, Bank Behavior and Financial Crisis: Evidence from GCC Banks

2015 ◽  
Vol 11 (3) ◽  
Author(s):  
Saibal Ghosh
Keyword(s):  
Bank Loan ◽  
Capital Regulation ◽  
Islamic Banks ◽  
Bank Capital ◽  
Loan Loss ◽  
Minimum Capital ◽  
Loan Loss Provisions ◽  
Bank Capital Regulation ◽  
Bank Behavior ◽  
Using Data

AbstractThe debate on bank capital regulation has in recent years devoted specific attention to the role that bank loan loss provisions play as a part of the overall minimum capital regulatory framework. Using data for 1996–2011, we find evidence in favor of both capital management and signaling behavior by GCC banks. Islamic banks appear to engage less in such behavior as compared to their non-Islamic counterparts.

Do Islamic banks use loan loss provisions to smooth their results?

2010 ◽  
Vol 1 (2) ◽  
pp. 114-127 ◽  
Author(s):  
Neila Boulila Taktak ◽  
Sarra Ben Slama Zouari ◽  
AbdelKader Boudriga
Keyword(s):  
Islamic Banks ◽  
Loan Loss ◽  
Loan Loss Provisions

Income smoothing behavior and the procyclical effect of loan loss provisions in Islamic banks

2019 ◽  
Vol 10 (1) ◽  
pp. 21-34 ◽  
Author(s):  
Sigid Eko Pramono ◽  
Hilda Rossieta ◽  
Wahyoe Soedarmono
Keyword(s):  
Fixed Effect Model ◽  
Income Smoothing ◽  
Islamic Banks ◽  
Loan Loss ◽  
Content Type ◽  
Loan Loss Provisions ◽  
Risk Increase ◽  
Effect Model ◽  
Prior Literature ◽  
Loan Growth

Purpose This study aims to test whether loan loss provisions in Islamic banks is procyclical by explicitly examining the link between non-discretionary provisions and loan growth. In the next stage, this paper tests whether the link between non-discretionary provisions and loan growth is conditional on bank capitalization and lending. This is to identify whether bank-specific factors affect the procyclicality of non-discretionary provisions and whether such procyclicality can be explained by income smoothing in banks with different capitalization and loan profiles. Design/methodology/approach This study is conducted in four stages. The first stage identifies the determinants of loan loss provisions. The second stage investigates whether income smoothing is affected by capitalization and lending activities. In the third stage, the link between non-discretionary provisions and loan growth is examined. In the fourth stage, this paper tests whether the link between non-discretionary provisions and loan growth is affected by bank capitalization and lending. A two-way panel-fixed effect model is used. Findings Non-discretionary provisions are procyclical, particularly for banks with lower capitalization and lending activities, because such banks do not conduct income smoothing. Specifically, banks with lower capitalization experience a decline in loan growth when non-discretionary provisions to cover credit risk increase. Research limitations/implications The dataset used in this study follows Soedarmono et al. (2017) and does not enable to differentiate types of financing products in Islamic banks that may exacerbate or mitigate the procyclicality of non-discretionary provisions. Originality/value This paper extends prior literature on the procyclicality of loan loss provisions by specifically investigating the influence of non-discretionary provisions on loan growth in Islamic banks and whether such relationship depends on the role of income smoothing undertaken by banks with different levels of capitalization and lending. This paper builds on the work of Soedarmono et al. (2017) in which they do not explicitly examine the relationship between loan loss provisions and loan growth.

scholarly journals The procyclicality of loan loss provisions in Islamic banks

2017 ◽  
Vol 39 ◽  
pp. 911-919 ◽  
Author(s):  
Wahyoe Soedarmono ◽  
Sigid Eko Pramono ◽  
Amine Tarazi
Keyword(s):  
Islamic Banks ◽  
Loan Loss ◽  
Loan Loss Provisions

The use of discretionary loan loss provisions by Islamic banks and conventional banks in the Middle East region

2014 ◽  
Vol 31 (1) ◽  
pp. 106-128 ◽  
Author(s):  
Hakim Ben Othman ◽  
Hounaida Mersni
Keyword(s):  
Middle East ◽  
Islamic Banks ◽  
Loan Loss ◽  
Accounting Earnings ◽  
Content Type ◽  
Loan Loss Provisions ◽  
East Region ◽  
Conventional Banks ◽  
The Impact ◽  
Middle East Region

Purpose – The purpose of this paper is to study earnings management practices of Islamic banks and conventional banks in the Middle East region. First, the authors examine factors that may influence Islamic banks managers' use of discretion in reporting loan loss provisions (LLP). Second, the authors investigate differences that may exist between Islamic banks and non-Islamic banks in terms of discretionary loan loss provisions (DLLP) used to manipulate accounting earnings. Design/methodology/approach – This empirical study uses an unbalanced panel data of 21 Islamic banks, 18 conventional banks with Islamic windows and 33 conventional banks, from seven Middle East countries during a period that ranges from 2000 to 2008. The authors use a two-stage approach in order to examine factors that may influence the use of discretion by Islamic banks' managers. Findings – The empirical results reveal that Islamic banks use DLLP for both earnings and capital management. External financing is also found to be a determinant of DLLP. Additional findings show no significant differences among Islamic banks, conventional banks with Islamic windows and conventional banks in using DLLP. These three groups of banks behave similarly in terms of discretion based on DLLP. Practical implications – The findings are potentially useful for regulators, auditors and investors. This study provides regulators with insights to strengthen their financial regulations in order to improve accounting quality. In addition, it helps auditors when considering the provisioning policies adopted by banks in order to detect specific manipulations of accounting earnings. The results may also help investors to focus on the impact of managerial discretion on accounting earnings for evaluation purposes. Originality/value – This study contributes to the literature on Islamic banking. On the one hand, it extends prior research by examining the discretionary component of LLP, instead of being restricted to total LLP. On the other hand, it compares the use of discretion among three groups of banks: full Islamic banks, conventional banks with Islamic windows and full conventional banks.

scholarly journals The Procyclicality of Loan Loss Provisions in Islamic Banks: Do Managerial Discretions Matter?

2016 ◽  
Author(s):  
Wahyoe Soedarmono ◽  
Sigid Eko Pramono ◽  
Amine Tarazi
Keyword(s):  
Islamic Banks ◽  
Loan Loss ◽  
Loan Loss Provisions

Analysis of Loan Loss Provisions : Malaysia and Gulf Corporation Countries ( GCC ) Islamic Banks

2015 ◽  
Vol 4 (2) ◽  
pp. 31-41 ◽  
Author(s):  
Nurhaslina Ramli ◽  
Shafinaz Ahmad Nazar ◽  
Siti Rohaya Mat Rahim
Keyword(s):  
Islamic Banks ◽  
Loan Loss ◽  
Loan Loss Provisions

scholarly journals DETERMINAN CADANGAN KERUGIAN PENURUNAN NILAI PADA BANK SYARIAH DI INDONESIA

2019 ◽  
Vol 5 (5) ◽  
pp. 352
Author(s):  
Ristra Ayu Damayanti ◽  
Noven Suprayogi
Keyword(s):  
Hypothesis Test ◽  
Islamic Banks ◽  
Analysis Software ◽  
Loan Loss ◽  
Loan Loss Provisions ◽  
Panel Data Regression ◽  
Data Regression ◽  
Domestic Products ◽  
Test Result ◽  
Statistical Analysis Software

This study aims to determine factors that affect loan loss provisions on Sharia Banks in Indonesia such as the financing compotition of cost plus transaction, financing compotition of profit loss sharing, non performing financing, gross domestic products and inflation. This study used panel data regression with Econometric Views (EViews) 8.0 as statistical analysis software. The samples are 11 Islamic Banks in Indonesia. During first quarterly 2012 to secondquarterly 2016, the hypothesis test result showed the factors the financing compotition of cost plus transaction, financing compotition of profit loss sharing, non performing financing, gross domestic products have significant result affecting loan loss provisions on Sharia Banks in indonesia

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