Corruption in bank lending: The role of timely loan loss recognition

Brian Akins, Yiwei Dou and Jeffrey Ng

Journal of Accounting and Economics, 2017, vol. 63, issue 2, 454-478

Abstract: Building on the recent literature on corruption in bank lending, we examine the effect of country-level timely loan loss recognition by banks on lending corruption using a unique World Bank dataset that covers more than 3,600 firms across 44 countries. We find evidence consistent with timely loan loss recognition constraining lending corruption because it increases the likelihood of problem loans being uncovered earlier. In further analysis, we find timely loan loss recognition to be less associated with reduced corruption in countries where there is significant government ownership in the banking system and deposit insurance schemes. This evidence is consistent with timely loan loss recognition being less of a deterrent to lending corruption when banks are less disciplined by their capital providers.

Keywords: Timeliness; Loan loss recognition; Corruption; Banks (search for similar items in EconPapers)
JEL-codes: G21 G38 M41 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (41)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaecon:v:63:y:2017:i:2:p:454-478

DOI: 10.1016/j.jacceco.2016.08.003

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