Repository logo
 

Income smoothing behavior among US banks a comparison of before and after policy change in 1999

Date

2015-10-02

Journal Title

Journal ISSN

Volume Title

Publisher

ORCID

Type

Thesis

Degree Level

Masters

Abstract

We investigate income smoothing behaviour for US bank holding companies. Our sample period covers from 1991 to 2013. We investigate whether policy change in late 90s affects income smoothing behaviour. Federal Financial Institutions Examination Council (FFIEC) introduced restrictive regulations to charge off of homogenous loans. We find that income smoothing continues even after the policy change but the association between provisioning and heterogeneous loans is not evident. However we get a significant positive association between provisioning and noninterest income. Moreover policy impacts in income smoothing process. The association between previous year charge off of homogenous loan and current year recovery was strong in 90s US financial institution. But after policy change, this relationship weakened. However, income smoothing avenue through previous year charge off of heterogeneous loan and current year recovery is still obvious. The association between current year recovery and gross loan charge off does not change for homogenous loan after policy change but this relationship for heterogeneous loan is stronger even after policy change.

Description

Keywords

Income Smoothing, Policy change, Charge off, Recovery

Citation

Degree

Master of Science (M.Sc.)

Department

Edwards School of Business

Program

Finance

Advisor

Part Of

item.page.relation.ispartofseries

DOI

item.page.identifier.pmid

item.page.identifier.pmcid