Us Bank Loan-Loss Provisions, Economic Conditions, and Regulatory Guidance
Author | : William C. Handorf |
Publisher | : |
Total Pages | : 18 |
Release | : 2006 |
ISBN-10 | : OCLC:1291202866 |
ISBN-13 | : |
Rating | : 4/5 ( Downloads) |
Download or read book Us Bank Loan-Loss Provisions, Economic Conditions, and Regulatory Guidance written by William C. Handorf and published by . This book was released on 2006 with total page 18 pages. Available in PDF, EPUB and Kindle. Book excerpt: We differentiate fundamental and discretionary loan-loss provisioning by specifying a balance sheet perspective model with two bank-specific variables and one external economic variable. Based on panel data of US commercial banks between 1990 and 2000, we find that on average, US banks are rational; that is, loan-loss provisions reflect current and projected bank losses. Average-sized banks are more forward-looking (anti-procyclical), which some researchers interpret as income smoothing. The smallest banks and the very largest banks that are quot;too big to failquot; are more backward-looking in provisioning, which some interpret as procyclical.