D4 Julkaistu kehittämis- tai tutkimusraportti tai -selvitys
Getting better? The effect of the single supervisory mechanism on banks' loan loss reporting and loan loss reserves
Tekijät: Kim Ristolainen
Kustantaja: Bank of Finland
Julkaisuvuosi: 2018
Journal: Bank of Finland Discussion Papers
Artikkelin numero: 11
Sarjan nimi: Bank of Finland Research Discussion Papers
Numero sarjassa: 11/2018
ISBN: 78-952-323-231-0
ISSN: 1456-6184
eISSN: 1456 -6184
Verkko-osoite: https://helda.helsinki.fi/bof/handle/123456789/15501
Rinnakkaistallenteen osoite: https://research.utu.fi/converis/portal/detail/Publication/37340504
The recent financial crises have brought into focus questions regarding the quality of banks’ assets. We study the patterns in banks reserving for and reporting of loan losses in the EU before and after implementation of the Single Supervisory Mechanism (SSM). We find that banks that 1) have less tier 1 capital, 2) are smaller, 3) are less liquid and 4) have smaller net interest margins either report relatively smaller loan loss reserves or less loan losses, even after including various controls. This supports the hypothesis that financially weaker banks may have a larger incentive to engage in balance sheet window dressing. We further find that the SSM has reduced but not eliminated the under-reserving and under-reporting bias. In addition, there has been a separate positive effect on the overall proportion of nonperforming loans (NPLs) that are realised as losses among the banks that have been under direct supervision by the SSM since implementation of the SSM.
Ladattava julkaisu This is an electronic reprint of the original article. |  |
