Author:
Ashraf Ali,Hassan M. Kabir,Putnam Kyle J.,Turunen-Red Arja
Abstract
We analyze if a change in accounting standard or a change in prudential regulationimpacts banks’ loan loss provision. We find that, in general, the banks using aprinciples-based accounting standard exhibit a lower level of earnings managementcompared to banks using a rules-based accounting standard. When a country movesfrom pro-cyclical macro-prudential regulations to a dynamic provisioning regime,banks are more likely to set aside a larger amount of loan loss provision for the purposeof income smoothing.
Publisher
Bank Indonesia, Central Banking Research Department
Cited by
7 articles.
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