THE IMPACT OF RESERVES PRACTICES ON BANK OPACITY

THE IMPACT OF RESERVES PRACTICES ON BANK OPACITY

This paper finds that banking firms’ unexpected loan loss provisions had a significant effect of increasing bank opacity, both before and during the 2007–2009 financial crisis. Furthermore, during the financial crisis, the extent to which banks delayed loan loss recognition is found to have had a si...

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Veröffentlicht in:Journal of financial management markets and institutions 2022-06, Vol.10 (1), p.1-26
Hauptverfasser: IANNOTTA, GIULIANO, KWAN, SIMON H.
Format: Artikel
Sprache:eng
Schlagworte:
Advisory groups
Bank opacity
Delayed
delays in loss recognition
Economic crisis
loan loss reserve
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Zusammenfassung:This paper finds that banking firms’ unexpected loan loss provisions had a significant effect of increasing bank opacity, both before and during the 2007–2009 financial crisis. Furthermore, during the financial crisis, the extent to which banks delayed loan loss recognition is found to have had a significant effect on bank opacity, confirming an important concern raised by the Financial Crisis Advisory Group. Overall, banks’ practices in managing reserves seem to have a material impact on their opacity.
ISSN:2282-717X
2282-717X
DOI:10.1142/S2282717X22500025