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The impact of financial crisis on bank revenue management

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  • Li Li Eng
  • Joohyung Ha

Abstract

This paper examines bank management of revenue through loan loss provisions (LLPs) during the period of 2003-2013. The sample period includes the financial crisis of 2008-2009, during which banks experienced revenue slowdowns owing to plunging mortgage lending activity. We examine whether LLPs are significantly different between the pre- and post-crisis periods. Our findings indicate that LLPs are not lower after the crisis; that is, banks are not using LLPs to manage earnings upward and smooth earnings in the post-crisis period. We also examine the effect of regulatory intervention on LLPs, measuring regulatory intervention using three variables: capital ratio, liquidity of assets, and bank size. Our findings indicate that banks that are less likely to face regulatory intervention are more likely to use LLPs to manage earnings upward and to smooth earnings in the post-crisis period.

Suggested Citation

  • Li Li Eng & Joohyung Ha, 2016. "The impact of financial crisis on bank revenue management," International Journal of Revenue Management, Inderscience Enterprises Ltd, vol. 9(4), pages 273-290.
    • Handle: RePEc:ids:ijrevm:v:9:y:2016:i:4:p:273-290
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    Cited by:

    1. Dafnomilis, Ioannis & Hoefnagels, Ric & Pratama, Yudistira W. & Schott, Dingena L. & Lodewijks, Gabriel & Junginger, Martin, 2017. "Review of solid and liquid biofuel demand and supply in Northwest Europe towards 2030 – A comparison of national and regional projections," Renewable and Sustainable Energy Reviews, Elsevier, vol. 78(C), pages 31-45.
    2. Chang, Chia-Lin & McAleer, Michael & Wang, Yu-Ann, 2018. "Modelling volatility spillovers for bio-ethanol, sugarcane and corn spot and futures prices," Renewable and Sustainable Energy Reviews, Elsevier, vol. 81(P1), pages 1002-1018.

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