دانلود رایگان مقاله انگلیسی هموار سازی درآمد در میان بانک های سیستماتیک و غیر سیستمیک اروپایی - الزویر 2018

Abstract

There is scant research on the financial reporting behaviour of global systemically-important banks (G-SIBs) and non-global systemically-important banks (non-G-SIBs). We examine the link between financial reporting and financial system stability given the understanding that income smoothing is a stability mechanism for banks. We empirically examine whether the way G-SIBs use loan loss provisions (LLPs) to smooth income differ compared to non-G-SIBs and the incentive to do so. We examine 231 European banks and find that income smoothing is pronounced among G-SIBs in the post-crisis period and pronounced among non-G-SIBs in the precrisis period. Also, G-SIBs exhibit greater income smoothing when they: (i) have substantial non-performing loans, (ii) are more profitable and meet/exceed minimum regulatory capital ratios (iii) engage in forwardlooking loan-loss provisioning and during recessionary periods. The implication of our findings is that capital regulation and abnormal economic fluctuations create incentives for systemic banks to use accounting numbers (loan loss provisions) to smooth income, which also align with the financial system stability objective of bank regulators. Our findings are useful to accounting standard setters in their evaluation of the role of reported accounting numbers for financial system stability, given the current regulatory environment in Europe which focuses on systemic banks.

Conclusion

This study examined whether the way GSIBs use accounting numbers to smooth income differ compared to non-G-SIBs and the incentives to do so. We focused on loan loss provisions – a crucial accounting number that has gained the attention of standard setters and bank supervisors. We observed that income smoothing is pronounced among G-SIBs in the post-crisis period and pronounced among non-G-SIBs in the pre-crisis period. We also find that G-SIBs exhibit greater income smoothing via LLP during recessionary periods and when they have double-digit non-performing loans. However, the trend is also observed during the periods of higher profitability, and when they meet/exceed minimum regulatory capital ratios. The findings are useful to accounting standard setters in their evaluation of the role of reported accounting numbers for financial system stability, given the current regulatory environment in Europe which focuses on systemic banks. The implication for banking supervision is that G-SIBs possibly use LLPs to smooth income to show or create the impression that they align their behaviour with financial system stability objectives required by bank supervisors. From an accounting standard setting standpoint, the findings that G-SIBs use LLPs to smooth income to a greater extent than non-G-SIBs may be of concern to standard setters because such practices lower the reliability and informativeness of their LLP estimates. Therefore, our suggestions for regulatory/supervisory reform would be to either set up disclosure rules that improve existing disclosure rules for all bank or to impose stricter disclosure rules for G-SIBs compared to non-G-SIBs in order to improve the reliability of provisions estimates in the determination of the loan portfolio quality of G-SIBs to help bondholders and shareholders assess the credit risk of banks including G-SIBs and non-G-SIBs. Finally, the question whether G-SIBs prefer to use a single financial number or a combination of techniques to smooth income is also interesting and is a fruitful direction for future research.