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PRUDENTIAL REGULATORY REGIMES, ACCOUNTING STANDARDS, AND EARNINGS MANAGEMENT IN THE BANKING INDUSTRY
Document Type
Article
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.
Recommended Citation
Ashraf, Ali; Hassan, M. Kabir; Putnam, Kyle J.; and Turunen-Red, Arja
(2019)
"PRUDENTIAL REGULATORY REGIMES, ACCOUNTING STANDARDS, AND EARNINGS MANAGEMENT IN THE BANKING INDUSTRY,"
Bulletin of Monetary Economics and Banking: Vol. 21:
No.
3, Article 3.
DOI: https://doi.org/10.21098/bemp.v21i3.975
Available at:
https://bulletin.bmeb-bi.org/bmeb/vol21/iss3/3
First Page
367
Last Page
394
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License
Country
USA
Affiliation
Frostburg State University