Do income smoothing, capital management, signaling, and pro-cyclicality exist through loan loss provisions? Evidence from Malaysia commercial banks

Do income smoothing, capital management, signaling, and pro-cyclicality exist through loan loss provisions? Evidence from Malaysia commercial banks

Loan loss provisions are the main accrual expenses charged to bank income statement to absorb loan losses arising from loans default. The main purpose of this dissertation is to examine whether Malaysia commercial banks use loan loss provisions as a tool in income smoothing, capital management, and...

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Main Author: Noor Shahieda, Mohd Hishamuddin
Format: Thesis
Language:eng
eng
Published: 2014
Subjects:
HG Finance
Online Access:https://etd.uum.edu.my/4141/1/s813328.pdf
https://etd.uum.edu.my/4141/2/s813328_abstract.pdf
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id my-uum-etd.4141
record_format uketd_dc
institution Universiti Utara Malaysia
collection UUM ETD
language eng
eng
advisor Abdul Adzis, Azira
topic HG Finance
spellingShingle HG Finance
Noor Shahieda, Mohd Hishamuddin
Do income smoothing, capital management, signaling, and pro-cyclicality exist through loan loss provisions? Evidence from Malaysia commercial banks
description Loan loss provisions are the main accrual expenses charged to bank income statement to absorb loan losses arising from loans default. The main purpose of this dissertation is to examine whether Malaysia commercial banks use loan loss provisions as a tool in income smoothing, capital management, and signaling. This dissertation also examines whether pro-cyclicality exists through loan loss provisions in Malaysia. Covering period from 2002 to 2012, the results indicate that Malaysian commercial banks do smooth income through loan loss provisions but no evidence for capital management. This dissertation also finds no evidence for Malaysia commercial banks to signal private information to outsiders. Although there is a negative coefficient between loan loss provisions and GDP, the results demonstrate that Malaysian commercial banks do not involve in pro-cyclical behavior through loan loss provisions. The results also show that the global financial crisis in 2008 does not affect loan loss provisions of Malaysian commercial banks.
format Thesis
qualification_name masters
qualification_level Master's degree
author Noor Shahieda, Mohd Hishamuddin
author_facet Noor Shahieda, Mohd Hishamuddin
author_sort Noor Shahieda, Mohd Hishamuddin
title Do income smoothing, capital management, signaling, and pro-cyclicality exist through loan loss provisions? Evidence from Malaysia commercial banks
title_short Do income smoothing, capital management, signaling, and pro-cyclicality exist through loan loss provisions? Evidence from Malaysia commercial banks
title_full Do income smoothing, capital management, signaling, and pro-cyclicality exist through loan loss provisions? Evidence from Malaysia commercial banks
title_fullStr Do income smoothing, capital management, signaling, and pro-cyclicality exist through loan loss provisions? Evidence from Malaysia commercial banks
title_full_unstemmed Do income smoothing, capital management, signaling, and pro-cyclicality exist through loan loss provisions? Evidence from Malaysia commercial banks
title_sort do income smoothing, capital management, signaling, and pro-cyclicality exist through loan loss provisions? evidence from malaysia commercial banks
granting_institution Univeristi Utara Malaysia
granting_department Othman Yeop Abdullah Graduate School of Business
publishDate 2014
url https://etd.uum.edu.my/4141/1/s813328.pdf
https://etd.uum.edu.my/4141/2/s813328_abstract.pdf
_version_ 1747827686886080512
spelling my-uum-etd.41412022-08-03T03:15:00Z Do income smoothing, capital management, signaling, and pro-cyclicality exist through loan loss provisions? Evidence from Malaysia commercial banks 2014 Noor Shahieda, Mohd Hishamuddin Abdul Adzis, Azira Othman Yeop Abdullah Graduate School of Business Othman Yeop Abdullah Graduate School of Business HG Finance Loan loss provisions are the main accrual expenses charged to bank income statement to absorb loan losses arising from loans default. The main purpose of this dissertation is to examine whether Malaysia commercial banks use loan loss provisions as a tool in income smoothing, capital management, and signaling. This dissertation also examines whether pro-cyclicality exists through loan loss provisions in Malaysia. Covering period from 2002 to 2012, the results indicate that Malaysian commercial banks do smooth income through loan loss provisions but no evidence for capital management. This dissertation also finds no evidence for Malaysia commercial banks to signal private information to outsiders. Although there is a negative coefficient between loan loss provisions and GDP, the results demonstrate that Malaysian commercial banks do not involve in pro-cyclical behavior through loan loss provisions. The results also show that the global financial crisis in 2008 does not affect loan loss provisions of Malaysian commercial banks. 2014 Thesis https://etd.uum.edu.my/4141/ https://etd.uum.edu.my/4141/1/s813328.pdf text eng public https://etd.uum.edu.my/4141/2/s813328_abstract.pdf text eng public masters masters Univeristi Utara Malaysia Alias, N. Z., & Mohamad, A. A. (2014, March 24). Economic Research. The 2013 Bank Negara Malaysia Annual Report, 1-16. Anandarajan, A., Hasan, I., & McCarthy, C. (2007). Use of loan loss provisions for capital, earnings management and signalling by Australian banks. Journal of Accounting and Finance, Vol. 47, 357-379. 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