Banking sector earnings management using loan loss provisions in the Fintech era

Peterson Ozili

MPRA Paper from University Library of Munich, Germany

Abstract: This paper analyse banking sector earnings management using loan loss provisions in the Fintech era. The findings show evidence for bank income smoothing using loan loss provisions. There is greater income smoothing in the second-wave Fintech era compared to the first-wave Fintech era, and the presence of strong institutions did not lower income smoothing in the second wave era. Bank income smoothing is also greater in (i) BIS and EU countries than in non-EU countries and G7 countries, (ii) well-capitalised banking sectors, and (iii) during economic booms, in the second wave Fintech era. The implication is that the competition for loans and deposits by banks and Fintech lenders in the second-wave Fintech era created additional incentives for banks to engage in income smoothing to report competitive and stable earnings

Keywords: banking sector; income smoothing; regulatory quality; legal quality; market power; Fintech; nonperforming loans; earnings smoothing; loan loss provisions; earnings management; digital finance. (search for similar items in EconPapers)
JEL-codes: G21 G23 M0 M4 M41 M42 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-ban and nep-pay
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Banking sector earnings management using loan loss provisions in the Fintech era (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:105083

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