Academic literature on the topic 'Loan loss provision (LLP)'
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Journal articles on the topic "Loan loss provision (LLP)"
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Shofiani, Prima. "ANALISIS INCOME SMOOTHING PADA PERBANKAN ISLAM NEGARA-NEGARA TELUK DI TIMUR TENGAH." Jurnal Ilmiah Akuntansi dan Keuangan 6, no. 2 (August 28, 2017): 55–64. http://dx.doi.org/10.32639/jiak.v6i2.91.
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Penelitian ini bertujuan menguji income smoothing menggunakan loan loss provision (LLP) pada perbankan Islam. Sampel penelitian ini adalah bank-bank Islam negara-negara Teluk Timur Tengah. Variabel dependen dalam penelitian ini adalah loan loss provision (LLP) dan variabel independen adalah total pembiayaan, non performing finance (NPF) dan capital adequacy ratio (CAR). Analisis data menggunakan regresi data panel dengan EViews 7. Hasil penelitian menunjukkan bahwa non performing finance (NPF) berpengaruh positif terhadap LLP. Total pembiayaan tidak berpengaruh positif terhadap loan loss provision (LLP) dan capital adequacy ratio (CAR) tidak berpengaruh positif terhadap loan loss provision (LLP).
Kata Kunci: loan loss provision (LLP), Income smoothing, Bank Islam
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Abu-Serdaneh, Jamal. "Bank loan-loss accounts, income smoothing, capital management, signaling and procyclicality." Journal of Financial Reporting and Accounting 16, no. 4 (December 3, 2018): 677–93. http://dx.doi.org/10.1108/jfra-06-2016-0041.
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Purpose The purpose of this paper is to investigate if Jordanian banks using provision accounts as a technique to smooth income, manage capital ratio, signal future earning and test other determinants affecting provision accounts. Design/methodology/approach The study was conducted on all Jordanian listed banks, and it covers the period 2005-2014. Different models are applied to test the dependent variables (loan loss provision [LLP] accounts) and its effects on different explanatory variables by using several statistical techniques (e.g. multiple regression). Findings The results show that there is no conclusive evidence supports that Jordanian banks used provision to smooth income, manage capital ratio or engage in pro-cyclical behavior. However, a positive and significant effect between one year ahead change in earnings and loan loss allowance, indicating that banks may use provisions to signal future positive changes in earnings. In addition, the results show that loan-to-asset ratio and beginning loan loss allowance have positive effect on provision accounts. Practical implications The results of this study are useful in assisting the regulators (e.g. US Securities and Exchange Commission, central bank) in efforts toward improving the quality of the reported financial reporting in the banking industry and focus on LLP management motivations. This study gives shareholders further insight which enables them to better understand the actions of managers and thus increase their control over their investments. Additionally, auditors should be aware of different incentives for using LLP as a tool of earnings management to be able to detect eventual manipulation of accounting earnings. Originality/value Banking in is one of the most stringently regulated of sectors and, furthermore, has a major impact on other sectors and on economic growth in general. In view of such importance, this study focuses on the banking industry and contributes to the literature in several ways. First, it represents the first known study, to the best of author knowledge, which examines if Jordanian banks use LLP accounts as a tool to smooth income and/or to manage capital. Second, unlike most existing research, which usually studies one aspect of LLP, this study focuses on four main motivations influencing provision accounts in the banks of Jordan. Third, additional tests were carried out to check the robustness of results, for example, sensitivity analysis is used to examine the change of findings by repeating of tests after using different proxies. Fourth, as a difference from other studies, this study investigates the effects of global financial crisis of 2008 on income smoothing behavior of Jordanian banking sector. Fifth, this paper provides a timely contribution to the continuous debate of the effect of LLP on earnings management in a poorly exploited setting, emerging market context.
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Zulfikar, Zulfikar, Mujiyati Mujiyati, Andy Dwi Bayu Bawono, and Sri Wahyuni. "Kebijakan Loan Loss Provision pada Pembiayaan Mudharaba dan dampaknya pada Kinerja Keuangan Bank Umum Syariah di Indonesia." Riset Akuntansi dan Keuangan Indonesia 4, no. 1 (April 29, 2019): 43–52. http://dx.doi.org/10.23917/reaksi.v4i1.7031.
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Penelitian ini menginvestigasi peran kebijakan loan loss provision (LLP) pembiayaan mudharabapada kinerja keuangan Bank Umum Syariah (BUS) di Indonesia. Structural Equation Modeling-Partial Least Square (SEM-PLS) digunakan untuk menguji keterkaitan loan loss provision dengankinerja keuangan pada 13 Bank Umum Syariah (BUS) selama 4,5 tahun. Analisis outer modelmenunjukkan bahwa probability of default dan loss given default merupakan faktor penentuloan loss provision. Sedangkan kinerja keuangan ditentukan oleh return on asset, nonperforming financial, net operating margin, dan biaya operasional terhadap pendapatanoperasional. Hasil penelitan ini menunjukkan bahwa loan loss provision berpengaruh langsungterhadap kinerja keuangan. Investigasi lebih lanjut menunjukkan bahwa pendapatanmudharaba berperan meningkatkan pengaruh loan loss provision terhadap kinerja keuangan(pengaruh tidak langsung).
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Bratten, Brian, Monika Causholli, and Linda A. Myers. "Fair Value Exposure, Auditor Specialization, and Banks’ Discretionary Use of the Loan Loss Provision." Journal of Accounting, Auditing & Finance 35, no. 2 (November 21, 2017): 318–48. http://dx.doi.org/10.1177/0148558x17742567.
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In this study, we examine whether banks’ use of the loan loss provision (LLP) to manage earnings is associated with (a) the extent to which banks hold assets subject to fair value reporting and (b) the use of an industry specialist auditor. We find that banks with a greater proportion of assets subject to fair value reporting (i.e., higher fair value exposure) use less LLP-based earnings management but more transaction-based earnings management (i.e., earnings management achieved by timing the realization of gains/losses). We also find that banks engaging industry specialist auditors use less LLP-based earnings management. Our findings suggest that banks’ use of the LLP to manage earnings is more limited when they have access to alternative earnings management tools and when they engage an auditor with more industry knowledge. Our results should be informative to regulators, members of the banking industry, and academics interested in the earnings management behavior of banks.
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Zheng, Changjun, Shumaila Meer Perhiar, Naeem Gul Gilal, and Faheem Gul Gilal. "Loan Loss Provision and Risk-Taking Behavior of Commercial Banks in Pakistan: A Dynamic GMM Approach." Sustainability 11, no. 19 (September 23, 2019): 5209. http://dx.doi.org/10.3390/su11195209.
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The paper analyzes the determinants of the loan loss provision (LLP) of 22 commercial banks in Pakistan from 2010 to 2017. The motive of the research is that LLP is a measure of credit risk as a proxy for bank risk-taking behavior profits and banks’ sustainability. Especially after the occurrence of a global financial crisis. The quantitative research method of data collection from Bureau Van Dijk’s BankFocus portal and the World Bank’s World Development Indicators. Other than considering specific bank variables such as capital adequacy ratio, return on average equity, and government securities, the effects of macroeconomic variable inflation and lending interest rates are explicitly studied. The model of pooled ordinary least squares (POLS), fixed effect (FE), panel corrected standard error (PCSE), and panel data estimation in the form of a general method of moments (GMM) two-step system is used to find the risk-taking behavior of banks in Pakistan. The results obtained by the use of inflation (INF) as an instrumental variable of LLP are highly dependable with a negative impact on loan loss provision. Lending interest rate (LIR) has a positive and significant relationship with LLP and contribute in the study of macroeconomic variables for bank risk-taking, excessive amount of interest rate was not beneficial for banks to earn profits especially during the economic crises. Return on average equity (ROAE) significantly moderates LLP with a negative interaction and helped the bank with profitable operations and save bank from solvency. Capital adequacy ratio (CAR) and government securities (GOV) are insignificant to LLP. The result is robust by measure of endogeneity, and highlights the important role of commercial banks’ sustainability to explain risk-taking behavior in Pakistan with the intention to increase profits after the occurrence of financial crises. The study further contributes to future research on managerial policy and decision making. In summary, the paper on loan loss provision has the capacity to forecast commercial banks’ credit risk for risk-taking in an emerging country.
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Islam, Fakir Tajul. "Evaluating Loan Loss Provisioning for Non-Performing Loans and Its Impact on the Profitability of Commercial Banks in Bangladesh." Asian Finance & Banking Review 2, no. 2 (December 21, 2018): 33–41. http://dx.doi.org/10.46281/asfbr.v2i2.222.
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Through the collection and disbursement of money, banks often face the risk of default of the loan. These Non-Performing loans (NPLs) should be identified and cared for avoiding vulnerability to other risk. Banks may mitigate this risk using loan loss provisioning (LLP). Using the aggregate data of 56 commercial banks in the last 9 years (2009-2017), this study attempts to evaluate the Impacts of LLP maintained for NPLs on profitability, as it may help to take the level of the LLP, and NPLs in the optimum level of business success. The dependent variables used in this study are Non-Interest Income to Total Assets and Net-Interest Income to Total Assets as a representative of the profitability of a bank. The dependent variables are analyzed using Least Square Multiple Regression on three independent variables, which were Gross NPL to Total Loans Outstanding, Loan Loss Provision Maintained, and Surplus/ (Shortfall) resulted from the required loan provisioning. The result showed that the profitability is very significantly influenced by the independent variables. NPLs and LLPs maintained by the commercial banks negatively related with the profitability of the business, especially LLPs shown statistical significance to impact on profitability negatively. it is better to take the LLPs and NPLs in the minimum level for maximum profitability of banks.
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Abdullah, Hasni, Imbarine Bujang, and Ismail Ahmad. "Loan Loss Provisions and Earnings Management in Malaysian Banking Industry." GATR Global Journal of Business Social Sciences Review 1, no. 1 (February 10, 2013): 93–104. http://dx.doi.org/10.35609/gjbssr.2013.1.1(10).
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Objective The main purpose of the study is to investigate the presence of earnings management incentive in affecting the LLP decision of commercial banks in Malaysia, focusing on the relation between loan loss provisions and earnings before tax and provisions. Methodology/Technique This study applies the pooled Ordinary Least Square model in assessing the determinants of the LLP. Findings The empirical findings clearly indicate that the LLP in Malaysian commercial banks is affected by earnings management for that particular period Type of Paper: Empirical paper Novelty : The expansion of the existing research in Malaysia in order to examine the extent to which the Malaysian banks engage in earnings and capital management, extends the period of investigation by considering the recent global financial crisis 2007-2009. Keywords: Loan Loss Provisions; Earnings Management; Capital Management; Macroeconomic Factors; Commercial Banks.
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Olson, Dennis, and Taisier A. Zoubi. "The determinants of loan loss and allowances for MENA banks." Journal of Islamic Accounting and Business Research 5, no. 1 (April 8, 2014): 98–120. http://dx.doi.org/10.1108/jiabr-07-2013-0027.
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Purpose – This study aims to examine the determinants of the allowance for loan losses (ALL) and loan loss provisions (LLP) for banks in the Middle East and North African (MENA) region using both a two-stage approach and simultaneous equation system to address the potential problem of estimation bias introduced by estimating the ALL and LLP separately. The paper also tests three competing hypotheses: the earnings management hypothesis, the capital management hypothesis, and the signaling hypothesis. Design/methodology/approach – The authors adopt a simultaneous equation and three-stage approaches to test whether MENA banks jointly determine LLP and ALL and the determinants of the two accounts. The sample consists of all available electronic data for 75 banks (451 bank-year observations) in nine MENA countries over the period 2000-2008. Findings – Evidence suggests that the two accounts are jointly determined. The results support the earnings management hypothesis – meaning that MENA banks have engaged in year-to-year income smoothing. The authors also find that LLP and ALL provide signals about future earnings. Research limitations/implications – The authors acknowledge that the LLP account is only one of many accounts on the income statement that could be used for signaling or to manage earnings, and that the ALL is one of several accounts that could be used for signaling, earnings or capital management. Future studies could examine other accruals for their role in managing earnings, signaling and capital. Practical implications – The results indicate that bank managers use LLP and ALL accounts to manage earnings management, policy makers may want to limit the ability of banks to manipulate earnings. Originality/value – Prior research on the loan loss accounting practices has been based on single equation models of the determinants of LLP and ALL. An issue that has not been adequately addressed in this literature is that ALL and LLP may be interrelated and jointly determined by banks. If the two accounts are not independent of each other, failure to include one when estimating the other may lead to an omitted variable problem, while including both in the same equation induces a potential simultaneity bias. The study is the first empirical work examining whether ALL and LLP are jointly determined by banks. By jointly estimating LLP and ALL, the study permits an assessment of the magnitude of the potential error from adopting ordinary least squares estimation of a single equation model.
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Desta, T. S. "Consequence of loan loss provisions on earnings management behaviour: A study on the best African commercial banks." South African Journal of Business Management 48, no. 3 (September 29, 2017): 1–11. http://dx.doi.org/10.4102/sajbm.v48i3.31.
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This study aimed at analysing the relationship between loan loss provision (LLP) and earnings management in the African commercial banks. The study selected the 11 banks among the 32 best commercial banks as identified by the Global Finance Magazine in 2014. These 11 banks are available online in the Bureau van Dijk Bankscope data and helped observe 10 years (2004-2013, of which 2003 is the base) financial statements, which accounts 34.38% of the 32 best banks. Accounting data derived from 11 years audited financial statements were used; 110 bank-year observations. A two stage panel regression, partial and pairwise correlation, and independent t-test were applied in order to analyse the relationship between the discretionary LLP (DLLP) and earnings management. Accordingly, the study found that loan to deposit (LD), return on asset (ROA), and earnings before tax and provision (EBTP) significantly influence the DLLP. Besides, banks with high premanaged earnings and well-capital more indulge in the DLLP. The study supports empirical findings on income smoothing and external financing hypotheses, but not the capital management hypothesis. Finally, further research on this topic is recommended, among others, by taking relatively large bank-year observations.
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Yang, Dong-Hoon. "Signaling through Accounting Accruals vs. Financial Policy: Evidence from Bank Loan Loss Provisions and Dividend Changes." Review of Pacific Basin Financial Markets and Policies 12, no. 03 (September 2009): 377–402. http://dx.doi.org/10.1142/s0219091509001678.
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This study examines substitution or complementarity relationships between discretionary loan loss provisions (LLP) and dividend signals. The statistical tests and results presented in this study indicate that bank managers may signal simultaneously with an accounting policy (i.e., discretionary LLP) and a financial policy (i.e., dividend change). This finding primarily points out the possibility that a bank manager with an incentive to mitigate asymmetric information can select multiple signals to maximize signaling effects. Thus, LLP signaling is a complementary (rather than a substitute) signaling device of dividend signaling.
Dissertations / Theses on the topic "Loan loss provision (LLP)"
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Choi, Diana. "The Effect of Bank Audit Committee Financial Experts on Loan Loss Provision Timeliness." The Ohio State University, 2018. http://rave.ohiolink.edu/etdc/view?acc_num=osu1531825061474902.
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Gustafson, Jesper, and David Möller. "Redovisning utav kreditförluster : subjektiva bedömningar för en rättvisande bild?" Thesis, Högskolan Kristianstad, Sektionen för hälsa och samhälle, 2014. http://urn.kb.se/resolve?urn=urn:nbn:se:hkr:diva-12378.
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För att värna om finansiell stabilitet utförs kontinuerligt bedömningar utav de risker och hot som återfinns mot det finansiella systemet, man granskar också det finansiella systemets motståndskraft emot dessa. För att förhindra att nya bankkriser uppstår införs med jämna mellanrum nya regleringar. Däribland skall en ny redovisningsmodell implementeras för redovisning utav kreditförluster – Expected loss model. Denna redovisningsmodell ger upphov till ett ökat inslag av bedömningar vid redovisning utav kreditförluster. Det blir därmed intressant att försöka förklara banktjänstemäns och revisorers uppfattningar angående subjektiva bedömningar och dess påverkan på en rättvisande bild vid redovisning utav kreditförluster. Genom att tillämpa en abduktiv ansats i studien har en växling mellan empirisk och teoretisk reflektion möjliggjorts vid skapande utav hypotesen. Med hjälp utav ett webbaserat frågformulär har man undersökt banktjänstemän och revisorers uppfattningar angående i vilken utsträckning subjektiva bedömningar leder till en rättvisande bild vid redovisning utav kreditförluster. Frågeformuläret tilldelades banktjänstemän som dagligen arbetar med förlustavsättningar och samtliga auktoriserade revisorer vilka är medlemmar i FAR. Empirin har sedan bearbetats statistiskt för att kunna testa den hypotes som tagits fram med bakgrund i studiens teoretiska referensram. Genom denna studie har man statistiskt kunnat säkerställa att det återfinns en skillnad i uppfattningar mellan banktjänstemän och revisorer angående hur subjektiva bedömningar speglar en rättvisande bild utav bankens kreditkvalitet. Man kan således i enlighet med studiens hypotes påvisa att banktjänstemän i större utsträckning anser att subjektiva bedömningar leder till en mer rättvisande bild utav bankens kreditkvalitet. Då bedömningar med stor sannolikhet förändras i samklang med rådande marknadsklimat och aktuella redovisningsstandarder anser man att studien fyller en kunskapslucka inom området.To protect the financial stability, assessments of the risk and threats to the financial system are carried out continuously. Also, the financial system’s resilience against these risks and threats is reviewed. To prevent creation of new bank crisis new regulation are implemented continuously. Among these, a new accounting model is implemented for the accounting of credit losses - Expected loss model. This accounting model gives rise to an increase in the use of assessments in the accounting of credit losses. This makes it interesting to try explaining bank office workers and auditors’ perceptions regarding subjective judgments and their impact on a true and fair view in accounting of credit losses. The application of an abductive view in the study made it possible to switch between empirical and theoretical reflections to be used in the creation of the hypothesis. An investigation of bank office workers and auditors’ perceptions regarding the extent to which subjective judgments impacts a true and fair view in accounting of credit losses was carried out through a questionnaire. The questionnaire was handed to bankers who in their daily work are in contact with loss provision and to all certified public accountants that are members of FAR. The result was then statistically processed in order to test the hypotheses which have been created from the study’s theoretical framework. This study has statistically made it possible to show that there is a difference in perceptions between bank office workers and auditors’ regarding how subjective judgments reflect a true and fair value of the bank’s credit quality. Therefore it is possible in accordance with the study’s hypothesis to prove that bank office workers to a greater extent believe that subjective judgments lead to a more true and fair value in accounting for credit losses. Since assessments with high probability change in consistence with current market conditions and accounting standards, it is believed that the study fills a knowledge gap in the field.
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Eriksson, Isabelle, and Elenor Stenberg. "Resultatstyrning genom kreditförlustreservering : En kvantitativ studie baserad på publika IFRS-rapporterande banker i EU." Thesis, Umeå universitet, Företagsekonomi, 2020. http://urn.kb.se/resolve?urn=urn:nbn:se:umu:diva-172420.
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Denna studie undersöker huruvida publika IFRS-rapporterande EU-banker använder kreditförlustreserven i syfte att styra resultatet. Genom att studera publicerad bokslutsdata för totalt 360 banker över tidsperioden 2012-2018 finner vi att när resultatet före skatt och kreditförlustreservering ökar med 1% av totala tillgångar ökar avsättningen för kreditförluster med 0,15% av totala tillgångar. Detta innebär att vi finner stöd för att företagsledare i banker använder kreditförlustreserven för att jämna ut resultatet över tid. Våra resultat visar vidare att banker som marginellt slagit ett nollresultat också har gjort avsättningar för kreditförluster som är 0,1% lägre än andra banker vilket innebär att vi finner stöd för att banker använder kreditförlustreserven för att slå ett nollresultat. Vårt resultat indikerar slutligen även att banker som redovisat en marginell vinsttillväxt också redovisat avsättningar för kreditförluster som är 0,1% lägre än andra banker. Detta innebär att vi finner stöd för att banker använder kreditförlustreserven för att kunna redovisa vinsttillväxt. Vi hävdar att det i huvudsak är kapitalmarknadsmässiga incitament som ligger bakom våra resultat. De finansiella rapporterna anses vara företagsledares främsta verktyg för att kommunicera information om bolagets prestation och finansiella ställning och är en viktig informationskälla för externa intressenter. I EU upprättas finansiella rapporter vanligtvis enligt IFRS vilket är ett principbaserat redovisningsregelverk som saknar detaljerade regler för hur det ska tillämpas. Regelverket öppnar således upp för företagsledare att använda subjektiva bedömningar i sin redovisning. Att utnyttja den diskretion som råder på ett sätt som inte medför att de finansiella rapporterna förmedlar en rättvisande bild av företagets prestation och finansiella ställning går under begreppet resultatstyrning. Kreditförlustreserven är en redovisningspost som avser att spegla bankens konstaterade och framtida förväntade kreditförluster i de finansiella rapporterna och den frågeställning denna studie ämnar besvara grundar sig i att företagsledare gör egna subjektiva bedömningar vid uppskattningen av dess storlek. Bedömningen är komplex och svår för externa intressenter att ifrågasätta vilket gör att posten lämnar utrymme för resultatstyrning. Det finns en bristfällig mängd forskning som studerar kreditförlustreservens koppling till resultatstyrning i Europa, vår studie bidrar därför till tidigare litteratur genom att den är baserad på EU-banker. Vår studie har vidare en annan infallsvinkel än många andra studier som undersökt kreditförlustreservens koppling till resultatstyrning vilket gör att den även bidrar med värdefull kunskap om resultatstyrning genom kreditförlustreserven i två situationer som inte testats i tidigare forskning.
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Francisco, Iracelma Adjanir José. "O impacto do financiamento externo na gestão de resultados e de capital : o caso dos bancos africanos." Master's thesis, Instituto Superior de Economia e Gestão, 2017. http://hdl.handle.net/10400.5/14243.
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Mestrado em Contabilidade, Fiscalidade e Finanças EmpresariaisEste trabalho tem como objetivo principal analisar o Impacto do Financiamento Externo no uso discricionário das Loan Loss Provisions (LLPs) para as práticas de Gestão de Resultado e de Capital nos bancos Africanos. Para a nossa análise foi usada uma amostra total de 678 bancos comerciais correspondentes a 26 países Africanos, num espaço temporal de 5 anos (2011-2015). Os nossos resultados não são estatisticamente significativos, pelo que não podemos concluir que o financiamento externo implica uma maior gestão de resultados. Apenas podemos concluir que o financiamento externo leva a uma maior gestão de capital. Estes resultados indicam que os gestores Africanos se centram mais em situações ligadas ao sector operacional, como a qualidade das carteiras de crédito e o problema da concentração de clientes que é muito presente neste mercado, do que propriamente em questões ligadas ao sector estratégico, como o posicionamento da instituição no mercado.
The main objective of this essay is to analyze the impact of external financing on the discretionary use of Loan Loss Provisions (LLPs) on earnings and capital Management practices in the Africans banks. We have a total sample of 678 commercial banks corresponding to 26 African countries over a five-year period (2011-2015). Our results indicates that external financing has not a significant influence on the discretionary use of LLPs to manage earnings. However it shows that external Financing has a negative and significant influence on the Capital Management practices. These results demonstrate that the interest of African managers is more focused on the operational sector, such as the quality of the loan portfolio and on the problem of customer concentration that is present in this market, rather than in the strategic sector, such as the institution's position in the market.
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Li, Kun-Hung, and 李昆鴻. "The Behavior of Bank Earnings Management:From the Provision for Loan Loss." Thesis, 2011. http://ndltd.ncl.edu.tw/handle/20506668590084692398.
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碩士國立暨南國際大學
財務金融學系
99
This study based on Chien-An Wang et al. who consider Provision for Loan Loss(PLL) is one of risk management to discuss two topic:(1)the timing of bank’s PLL that include Government Regulation,M&A and Executive management change,whether managers have a motive to increase PLL.(2)To observe bank’s asset quality that we focus on mortgage,and discuss relationship between housing Loan Loss Reserve(LLR) and real estate cycle:procyc -licality or anticyclicality,to forecast real estate cycle. The results :(1) Government Regulation effect bank’s PLL obviously,but we can’t find the same situation on M&A and Executive management change.However,we can find manager from M&A samples control accounting subjects, including write off loan and write off loan recovered etc.We can’t find earnings management in our Executive management change’s sample,because bank change manager frequently so bank’s PLL policy can’t change with Executive management change.(2)In 2009,real estate was prosperity and government implemented policy make real estate depressed ,so that bank pay attention to mortgage and write off more loan.Then we find bank’s housing LLR inadequate.Finally,in 2009 Q3~Q4, the relationship conform procyclicality.
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Su, Mei-lan, and 蘇美蘭. "AN ANALYSIS OF FACTORS INFLUENCING BANK'S LOAN LOSS PROVISION DECISIONS IN TAIWAN." Thesis, 2009. http://ndltd.ncl.edu.tw/handle/55162638072317530332.
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碩士南華大學
財務金融學系財務管理碩士班
97
Due to the requirement of lowering the over-due ratio of recent financial reform policy, the banking industry in Taiwan has been focusing on decisions of loan loss provisions and write-offs. However, in the other hand, for the purpose of earning management, banks also control securities gains and losses frequently. Since the decisions of loan loss provisions and securities gains and losses are correlated each other and are determined simultaneously, the purpose of this study is to analyze the factors influencing the two policies using the Limited Information Maximum Likelihood estimation method. A total of 172 sample banks during the years of 2000 to 2005 are used. The results of LIML show that previous loan loss provisions, current outstanding overdue loan, and issue of subordinate debt are positively and significantly correlated to current loan loss provisions. BIS ratio, expected earnings, issue of subordinate debt, and cash dividend are found positive and significantly correlated to securities gains and losses. The results of Analytically Derived Reduced Form (ADRF) show that a unit changes in previous loan loss provisions will have net effects of 0.2197 and -0.000824 unit changes on loan loss provision, respectively. A 1% changes in current BIS will result in an 8.7 billion increases and a 12.0 billion decreases in loan loss provisions and securities gains and losses, respectively. The issue of subordinate debts will have a 4.2 and 4.3 billions increases in loan loss provisions and securities gains and losses, respectively. Cash dividend will result in a 2.7million and 6.5billion increases in loan loss provisions and securities gains and losses, respectively. The results of multiplier effects show that, in the long run, an increase in 1% of BIS will have a total of 11.1billion decrease in loan loss provisions and a total of 12.0 billion increases in securities gains and losses, respectively. Total effect of the issue of subordinate debts is a 5.4 and 0.42 billion increases in loan loss provisions and securities gains and losses, respectively. Total effect of cash dividend policy will have a 3.4 million and 0.65 billion increases in loan loss provisions and securities gains and losses, respectively.
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Huang, Hung-Lang, and 黃弘琅. "The Impact of Capital Adequacy Ratio on Banks' Loan-Loss Provision and Performance." Thesis, 2011. http://ndltd.ncl.edu.tw/handle/80034652993368735200.
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碩士國立臺北大學
國際財務金融碩士在職專班
99
This study aims to explore the non-linear relationship between capital adequacy ratio (hereinafter referred to as the “CAR”) and bank’s performance and loan-loss provision. This study adopts the empirical model of Gonza'lez, Teräsvirta and Dijk（2004, 2005） to verify whether the panel smooth transition effect exists in the above-mentioned variables by using a full quarterly data set from 26 banks in Taiwan, through 2007Q4 to 2010Q3. The study has conclusions as follows: The panel smooth transition effect indeed exists between the CAR and the bank’s loan-loss provision. The transition regimes provides a smooth transition process around the threshold where the value of CAR is 10.0046% and the transition speed is 2.2978. Nevertheless, the panel smooth transition regression model results in a structural variance when applying for the effect between the CAR and the bank’s performance. The model is transformed into a leap model around the threshold where the value of CAR is 12.2871% and the transition speed is soaring as high as 1.5343e+003. Moreover, when introducing other control variables into the model, considering the impact on bank’s performance and loan-loss provision, it suggests that the higher the total asset scale is, the higher the loan-loss provision is, but impair the performance of banks with higher CAR. The higher the ratio of liquidity reserves is, the higher the loan-loss provision and performance are, but not significantly influence the performance of banks with higher CAR. However, the ratio of NPL negatively influences both banks’ performance and loan-loss provision with no differences among banks.
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Huang, Chen-Shi, and 黃晨溪. "The implications of capital ratio and earnings for banks’ loan loss provision timeliness." Thesis, 2017. http://ndltd.ncl.edu.tw/handle/vsn55b.
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碩士國立臺灣大學
會計學研究所
105
Using a sample of U.S. bank holding companies from 2002 to 2014, I find banks with above-median total capital ratio recognize larger and timelier loan loss provisions. In addition, banks record larger amount of loan loss when they have higher earnings before loan loss provisions and income taxes. These results are consistent with the view that well-capitalized banks are more capable to record timelier loan loss provision, and are more conservative toward credit risk management. Also, the result suggests banks with higher income provide timelier information regarding loan losses. I also conduct an additional test to examine if the empirical result is driven by financial crisis. I exclude bank-year observations from 2007 to 2009 to address the concerns. I continue to find that current earnings are positively associated with timely recognition of loan loss provisions, but fail to document a relationship between capital ratio and loan loss recognition timeliness.
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Bettinghaus, Bruce Alan. "Earnings management by merger targets : discretion over the loan loss provision in commercial banks." 2000. http://www.etda.libraries.psu.edu/theses/approved/WorldWideIndex/ETD-44/index.html.
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Ching-HungLin and 林慶宏. "The Predictive Capability of Commercial Banks’ Loan Loss Provision on the Real Estate Cycle in the US." Thesis, 2015. http://ndltd.ncl.edu.tw/handle/nua36x.
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碩士國立成功大學
財務金融研究所碩士在職專班
103
Since 2014 the prosperity of the U.S. has recovered gradually, it has led to the attention of interest raising issues and had further effect on the real estate due to the adjustment of Fed Fund Rates. More studies have concentrated on the connection between the market of real estate and the stability of banking firms after the crisis of subprime loan. This research constructs under two different circumstances, and it overlooks the prediction of the effect towards US commercial bank real estate loan amount on the basis of 44.8% and the result at the end of 2012 (49.1%) and 2013 (46.3%), and tries to focus on observing the prediction on real estate market. This research has used overall 247 commercial banks from 2004 to 2013, which have been differentiated into upper-tier and lower-tier based on NASDAQ data, as the research samples and retrieved the following conclusions: (1) It is supportive that Loan Loss Provision (LLP) provides further prediction to real estate market based on the the comparison among overall, upper-tier and lower-tier sample banks. (2) The theory of Take a Big Bath is supported by overall and upper-tier samples. The result indicates that there is negative relationship between the increase and decrease in surplus and LLP in surplus management based on different comparisons in different level of banks.(3) In capital management, comparing overall, upper-tier and lower-tier banks, it is found out that there is no significant relationship between banks and LLP. (4) In the perspective of business cycle, the result indicates that the bank comparisons do not have influential effect on counter cycle effect.
Books on the topic "Loan loss provision (LLP)"
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Connell, Tula A. Let the People Vote. University of Illinois Press, 2017. http://dx.doi.org/10.5406/illinois/9780252039904.003.0005.
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This chapter details the strategies involved in a 1951 campaign by a coalition of small property owners and anti-tax proponents who sought to halt creation of public housing through a ballot referendum. Leading the coalition is long-time civic activist and savings-and-loan official William Pieplow. Pieplow's elevation of individual rights was tempered by a belief in “public virtue”—a willingness to sacrifice private to public interests, a characteristic championed in the early days of the nation's founding as essential for republican government. Although the referendum campaign received some support from the national housing and builder associations, which vehemently opposed the 1949 Housing Act, the movement Pieplow and his cohorts spearheaded was a genuinely grassroots expression, one that sought to defend against the perceived loss of individual rights that would result from the provision of public housing.
Book chapters on the topic "Loan loss provision (LLP)"
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Hatane, Saarce Elsye, Amadea Nathania Pranoto, Josua Tarigan, Josephine Alexandra Susilo, and Ang Jonathan Christianto. "The CSR Performance and Earning Management Practice on the Market Value of Conventional Banks in Indonesia." In Global Challenges and Strategic Disruptors in Asian Businesses and Economies, 196–213. IGI Global, 2021. http://dx.doi.org/10.4018/978-1-7998-4787-8.ch012.
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This study examined the effect of the components of corporate social responsibility (CSR) and earnings management on market value, measured using Tobin's Q. CSR is measured by using KLD Index, while earnings management used discretionary loan loss provision. The GMM-SYS (generalized method of moment system) dynamic panel data method is employed to examine the research framework on conventional banks listed in Indonesia Stock Exchange. Among six components in CSR disclosures, only corporate governance, environmental and product disclosures are favorable for bank's market value. Furthermore, earnings management had a positive impact on market value. Empirical result indicated that CSR functions as a part of bank strategic moves in order to survive the highly dynamical business environment. Since CSR inflicts additional costs for the company, they must perform CSR efficiently while maintaining a strong relationship with shareholders. This study contributes to CSR and financial management literature by finding the nature of CSR effects as future strategic investment.
Conference papers on the topic "Loan loss provision (LLP)"
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Ma, Jibin, and Yi Cheng. "Research on Risk Management of Bank Loan and Loss Provision Based on Markov Chain." In 2009 International Conference on E-Business and Information System Security (EBISS). IEEE, 2009. http://dx.doi.org/10.1109/ebiss.2009.5138055.
Full textReports on the topic "Loan loss provision (LLP)"
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Financial Stability Report - Second Semester of 2020. Banco de la República de Colombia, March 2021. http://dx.doi.org/10.32468/rept-estab-fin.sem2.eng-2020.
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The Colombian financial system has not suffered major structural disruptions during these months of deep economic contraction and has continued to carry out its basic functions as usual, thus facilitating the economy's response to extreme conditions. This is the result of the soundness of financial institutions at the beginning of the crisis, which was reflected in high liquidity and capital adequacy indicators as well as in the timely response of various authorities. Banco de la República lowered its policy interest rates 250 points to 1.75%, the lowest level since the creation of the new independent bank in 1991, and provided ample temporary and permanent liquidity in both pesos and foreign currency. The Office of the Financial Superintendent of Colombia, in turn, adopted prudential measures to facilitate changes in the conditions for loans in effect and temporary rules for rating and loan-loss provisions. Finally, the national government expanded the transfers as well as the guaranteed credit programs for the economy. The supply of real credit (i.e. discounting inflation) in the economy is 4% higher today than it was 12 months ago with especially marked growth in the housing (5.6%) and commercial (4.7%) loan portfolios (2.3% in consumer and -0.1% in microloans), but there have been significant changes over time. During the first few months of the quarantine, firms increased their demands for liquidity sharply while consumers reduced theirs. Since then, the growth of credit to firms has tended to slow down, while consumer and housing credit has grown. The financial system has responded satisfactorily to the changes in the respective demands of each group or sector and loans may grow at high rates in 2021 if GDP grows at rates close to 4.6% as the technical staff at the Bank expects; but the forecasts are highly uncertain. After the strict quarantine implemented by authorities in Colombia, the turmoil seen in March and early April, which was evident in the sudden reddening of macroeconomic variables on the risk heatmap in Graph A,[1] and the drop in crude oil and coal prices (note the high volatility registered in market risk for the region on Graph A) the local financial markets stabilized relatively quickly. Banco de la República’s credible and sustained policy response played a decisive role in this stabilization in terms of liquidity provision through a sharp expansion of repo operations (and changes in amounts, terms, counterparties, and eligible instruments), the purchases of public and private debt, and the reduction in bank reserve requirements. In this respect, there is now abundant aggregate liquidity and significant improvements in the liquidity position of investment funds. In this context, the main vulnerability factor for financial stability in the short term is still the high degree of uncertainty surrounding loan quality. First, the future trajectory of the number of people infected and deceased by the virus and the possible need for additional health measures is uncertain. For that reason, there is also uncertainty about the path for economic recovery in the short and medium term. Second, the degree to which the current shock will be reflected in loan quality once the risk materializes in banks’ financial statements is uncertain. For the time being, the credit risk heatmap (Graph B) indicates that non-performing and risky loans have not shown major deterioration, but past experience indicates that periods of sharp economic slowdown eventually tend to coincide with rises in non-performing loans: the calculations included in this report suggest that the impact of the recession on credit quality could be significant in the short term. This is particularly worrying since the profitability of credit establishments has been declining in recent months, and this could affect their ability to provide credit to the real sector of the economy. In order to adopt a forward-looking approach to this vulnerability, this Report presents several stress tests that evaluate the resilience of the liquidity and capital adequacy of credit institutions and investment funds in the event of a hypothetical scenario that seeks to simulate an extreme version of current macroeconomic conditions. The results suggest that even though there could be strong impacts on the credit institutions’ volume of credit and profitability under such scenarios, aggregate indicators of total and core capital adequacy will probably remain at levels that are above the regulatory limits over the horizon of a year. At the same time, the exercises highlight the high capacity of the system's liquidity to face adverse scenarios. In compliance with its constitutional objectives and in coordination with the financial system's security network, Banco de la República will continue to closely monitor the outlook for financial stability at this juncture and will make the decisions that are necessary to ensure the proper functioning of the economy, facilitate the flow of sufficient credit and liquidity resources, and further the smooth operation of the payment systems. Juan José Echavarría Governor