Determinants of the loan loss allowance: some cross-country comparisons

Iftekhar Hasan and Larry Wall

No 33/2003, Bank of Finland Research Discussion Papers from Bank of Finland

Abstract: This paper analyses the determinants of banks loan loss allowances for samples of US banks and three non-US samples: a group of 21 countries, Canada and Japan.The model includes fundamental (or non-discretionary) determinants of the allowance such as non-performing loans, and discretionary determinants such as income before the loan loss provision.The results suggest that the loan loss allowance is sensitive to pre-provision income in almost all samples.However, the results also suggest that some variables thought to reflect fundamental factors in US analysis, such as net chargeoffs, are not significant factors for non-US banks.

Keywords: loan loss allowance; accounting standards; international banking; nonperforming loan; discretionary accruals (search for similar items in EconPapers)
JEL-codes: E58 F23 G21 G28 G33 (search for similar items in EconPapers)
Date: 2003
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https://www.econstor.eu/bitstream/10419/211966/1/bof-rdp2003-033.pdf (application/pdf)

Related works:
Journal Article: Determinants of the Loan Loss Allowance: Some Cross‐Country Comparisons (2004)
Working Paper: Determinants of the loan loss allowance: some cross-country comparisons (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bofrdp:rdp2003_033

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