Bank income smoothing, institutions and corruption

Peterson Ozili

Research in International Business and Finance, 2019, vol. 49, issue C, 82-99

Abstract: This study investigates bank income smoothing, focusing on the effect of corruption on income smoothing by African banks. I find that banks use loan loss provisions to smooth positive (non-negative) earnings particularly in the post-2008 crisis period and this behaviour is reduced by strong investor protection. Also, I find that banks in highly corrupt environments smooth their positive (non-negative) earnings as opposed to smoothing the entire profit distribution. Finally, cross-country variation in bank income smoothing is observed. The findings have implications.

Keywords: Loan loss provisions; Earnings management; Investor protection; Corruption; Income smoothing (search for similar items in EconPapers)
JEL-codes: G21 K41 M41 N27 O55 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (8)

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Working Paper: Bank Income Smoothing, Institutions and Corruption (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:49:y:2019:i:c:p:82-99

DOI: 10.1016/j.ribaf.2019.02.009

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