Determinants of Portuguese bank’s provisioning policies: Discretionary behaviour of generic and specific allowances
Autor(a) principal: | |
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Data de Publicação: | 2009 |
Outros Autores: | |
Tipo de documento: | Artigo |
Idioma: | eng |
Título da fonte: | Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
Texto Completo: | http://hdl.handle.net/10362/14948 |
Resumo: | In this paper we test for the impact of the regulatory environment on a bank’s discretionary provisioning practices. We develop a model that structures the dynamics of the provision policy for the two classes of provisions: generic provisions and specific provisions. The model is tested using a comprehensive database of all financial institutions operating in Portugal for 1990-2000. This unique dataset comprises banks subject to the Portuguese rules as well as bank subsidiaries subject to their home-country regulation and we were able to identify distinct behaviours between them. Our results show the importance of handling he two types of provisions separately. They support the hypothesis that banks have a discretionary behaviour in setting up their provisions, and find evidence of income smoothing and capital management. We also find that the regulatory regime impacts on discretionary provisioning policies because banks when forced to increase one type of provision react by reducing the iscretionary component of the other, a finding we designated as a substitution effect. |
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Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
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7160 |
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Determinants of Portuguese bank’s provisioning policies: Discretionary behaviour of generic and specific allowancesBankingProvision policyIncome smoothingIn this paper we test for the impact of the regulatory environment on a bank’s discretionary provisioning practices. We develop a model that structures the dynamics of the provision policy for the two classes of provisions: generic provisions and specific provisions. The model is tested using a comprehensive database of all financial institutions operating in Portugal for 1990-2000. This unique dataset comprises banks subject to the Portuguese rules as well as bank subsidiaries subject to their home-country regulation and we were able to identify distinct behaviours between them. Our results show the importance of handling he two types of provisions separately. They support the hypothesis that banks have a discretionary behaviour in setting up their provisions, and find evidence of income smoothing and capital management. We also find that the regulatory regime impacts on discretionary provisioning policies because banks when forced to increase one type of provision react by reducing the iscretionary component of the other, a finding we designated as a substitution effect.EuroJournals PublishingRUNPinho, Paulo Soares deMartins, Nuno Carvalho2015-05-14T08:20:49Z20092009-01-01T00:00:00Zinfo:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/articleapplication/pdfhttp://hdl.handle.net/10362/14948engJournal of Money, Investment and Banking, V. 10, p. 43-561450-288Xinfo:eu-repo/semantics/openAccessreponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãoinstacron:RCAAP2024-03-11T03:50:25Zoai:run.unl.pt:10362/14948Portal AgregadorONGhttps://www.rcaap.pt/oai/openaireopendoar:71602024-03-20T03:22:12.101098Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãofalse |
dc.title.none.fl_str_mv |
Determinants of Portuguese bank’s provisioning policies: Discretionary behaviour of generic and specific allowances |
title |
Determinants of Portuguese bank’s provisioning policies: Discretionary behaviour of generic and specific allowances |
spellingShingle |
Determinants of Portuguese bank’s provisioning policies: Discretionary behaviour of generic and specific allowances Pinho, Paulo Soares de Banking Provision policy Income smoothing |
title_short |
Determinants of Portuguese bank’s provisioning policies: Discretionary behaviour of generic and specific allowances |
title_full |
Determinants of Portuguese bank’s provisioning policies: Discretionary behaviour of generic and specific allowances |
title_fullStr |
Determinants of Portuguese bank’s provisioning policies: Discretionary behaviour of generic and specific allowances |
title_full_unstemmed |
Determinants of Portuguese bank’s provisioning policies: Discretionary behaviour of generic and specific allowances |
title_sort |
Determinants of Portuguese bank’s provisioning policies: Discretionary behaviour of generic and specific allowances |
author |
Pinho, Paulo Soares de |
author_facet |
Pinho, Paulo Soares de Martins, Nuno Carvalho |
author_role |
author |
author2 |
Martins, Nuno Carvalho |
author2_role |
author |
dc.contributor.none.fl_str_mv |
RUN |
dc.contributor.author.fl_str_mv |
Pinho, Paulo Soares de Martins, Nuno Carvalho |
dc.subject.por.fl_str_mv |
Banking Provision policy Income smoothing |
topic |
Banking Provision policy Income smoothing |
description |
In this paper we test for the impact of the regulatory environment on a bank’s discretionary provisioning practices. We develop a model that structures the dynamics of the provision policy for the two classes of provisions: generic provisions and specific provisions. The model is tested using a comprehensive database of all financial institutions operating in Portugal for 1990-2000. This unique dataset comprises banks subject to the Portuguese rules as well as bank subsidiaries subject to their home-country regulation and we were able to identify distinct behaviours between them. Our results show the importance of handling he two types of provisions separately. They support the hypothesis that banks have a discretionary behaviour in setting up their provisions, and find evidence of income smoothing and capital management. We also find that the regulatory regime impacts on discretionary provisioning policies because banks when forced to increase one type of provision react by reducing the iscretionary component of the other, a finding we designated as a substitution effect. |
publishDate |
2009 |
dc.date.none.fl_str_mv |
2009 2009-01-01T00:00:00Z 2015-05-14T08:20:49Z |
dc.type.status.fl_str_mv |
info:eu-repo/semantics/publishedVersion |
dc.type.driver.fl_str_mv |
info:eu-repo/semantics/article |
format |
article |
status_str |
publishedVersion |
dc.identifier.uri.fl_str_mv |
http://hdl.handle.net/10362/14948 |
url |
http://hdl.handle.net/10362/14948 |
dc.language.iso.fl_str_mv |
eng |
language |
eng |
dc.relation.none.fl_str_mv |
Journal of Money, Investment and Banking, V. 10, p. 43-56 1450-288X |
dc.rights.driver.fl_str_mv |
info:eu-repo/semantics/openAccess |
eu_rights_str_mv |
openAccess |
dc.format.none.fl_str_mv |
application/pdf |
dc.publisher.none.fl_str_mv |
EuroJournals Publishing |
publisher.none.fl_str_mv |
EuroJournals Publishing |
dc.source.none.fl_str_mv |
reponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação instacron:RCAAP |
instname_str |
Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação |
instacron_str |
RCAAP |
institution |
RCAAP |
reponame_str |
Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
collection |
Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
repository.name.fl_str_mv |
Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação |
repository.mail.fl_str_mv |
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1799137861327388672 |