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An analysis of loan loss provisioning behaviour in Vietnamese banking

Author

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  • Bryce, Cormac
  • Dadoukis, Aristeidis
  • Hall, Maximilian
  • Nguyen, Linh
  • Simper, Richard

Abstract

This paper investigates loan loss provisioning (LLP) behaviour by Vietnamese banks during the period 2006–2012. We test the capital, income-smoothing and cyclical management hypotheses and examine whether the inclusion of X-efficiencies and/or risk control variables influences provisioning behaviour. When the X-efficiency estimates are incorporated into the models, Vietnamese banks do not exhibit counter-cyclical or capital management manipulation by managers, but counter cyclical income smoothing. Yet, the inclusion of risk control variables in X-efficiency scores (either equity or reserves for impaired loans) supports the addition of capital management hypotheses.

Suggested Citation

  • Bryce, Cormac & Dadoukis, Aristeidis & Hall, Maximilian & Nguyen, Linh & Simper, Richard, 2015. "An analysis of loan loss provisioning behaviour in Vietnamese banking," Finance Research Letters, Elsevier, vol. 14(C), pages 69-75.
    • Handle: RePEc:eee:finlet:v:14:y:2015:i:c:p:69-75
    DOI: 10.1016/j.frl.2015.05.014
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    Cited by:

    1. Simper, Richard & Dadoukis, Aristeidis & Bryce, Cormac, 2019. "European bank loan loss provisioning and technological innovative progress," International Review of Financial Analysis, Elsevier, vol. 63(C), pages 119-130.
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    3. Ozili, Peterson K & Outa, Erick R, 2018. "Bank Income Smoothing in South Africa: Role of Ownership, IFRS and Economic fluctuation," MPRA Paper 102567, University Library of Munich, Germany.
    4. Aristei, David & Gallo, Manuela, 2019. "Loan loss provisioning by Italian banks: Managerial discretion, relationship banking, functional distance and bank risk," International Review of Economics & Finance, Elsevier, vol. 60(C), pages 238-256.
    5. Athanasios Tsagkanos & Konstantinos Gkillas & Christoforos Konstantatos & Christos Floros, 2021. "Does Trading Volume Drive Systemic Banks’ Stock Return Volatility? Lessons from the Greek Banking System," IJFS, MDPI, vol. 9(2), pages 1-13, April.
    6. Ozili, Peterson K, 2019. "Bank Income Smoothing, Institutions and Corruption," MPRA Paper 92339, University Library of Munich, Germany.
    7. Ozili, Peterson K, 2017. "Bank Loan Loss Provisions Research: A Review," MPRA Paper 76495, University Library of Munich, Germany.
    8. Gkillas (Gillas), Konstantinos & Tsagkanos, Athanasios & Siriopoulos, Costas, 2016. "The risk in capital controls," Finance Research Letters, Elsevier, vol. 19(C), pages 261-266.
    9. Amina Malik & Haroon Aziz & Buerhan Saiti & Shahab Ud Din, 2021. "The Impact of Earnings variability and Regulatory Measures on Income Smoothing: Evidence from Panel Regression," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 10(1), pages 183-201.
    10. Ozili, Peterson K., 2019. "Bank income smoothing, institutions and corruption," Research in International Business and Finance, Elsevier, vol. 49(C), pages 82-99.

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    More about this item

    Keywords

    Loan loss provisioning; Capital management hypothesis; Income smoothing; Vietnam; X-efficiency;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • G01 - Financial Economics - - General - - - Financial Crises
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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