Effects of loan loss provisions on growth in bank lending: some international comparisons

Vincent Bouvatier and Laetitia Lepetit

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Abstract: A dynamic provisioning system is one of the instruments that regulators could use for introducing counter-cyclicality into prudential regulation. The potential effectiveness of such instrument depends on how far actual backward-looking provisioning practices exacerbate growth in bank lending. We therefore investigate whether backward-looking provisioning practices amplify growth in bank lending and, if such an effect exists, whether there are differences in its magnitude across countries. Our results show that backwardlooking provisioning systems exacerbate banks' lending fluctuations in both developed and emerging countries, but with a stronger impact for emerging countries.

Keywords: Bank Lending; Loan loss Provisions; Procyclicality (search for similar items in EconPapers)
Date: 2012
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Published in International Economics, 2012, 132, ⟨10.2139/ssrn.1663580⟩

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Related works:
Journal Article: Effects of Loan Loss Provisions on Growth in Bank Lending: Some International Comparisons (2012)
Working Paper: Effects of loan loss provisions on growth in bank lending: some international comparisons (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00785580

DOI: 10.2139/ssrn.1663580

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