<abstract xmlns="http://www.w3.org/1999/xhtml"><p>In this paper we used a panel of Albanian banks for the period 2004-2014 to examine the main determinants of loan loss provisions. In addition, we tested how the latest crisis has affected provisioning behaviour of the banks. We find that loan loss provisions of banks are driven by non-discretionary components and economic fluctuations. Furthermore, we find a positive and significant result between earnings before interest, taxes and provisions and loan loss provisions, thus confirming the income smoothing hypothesis. Our estimated results do not support the capital management and signalling hypotheses. We also find that the global crisis has contributed significantly to the procyclicality of loan loss provisioning in Albania and banks continued to do income smoothing during the crisis.</p></abstract>

In this paper we used a panel of Albanian banks for the period 2004-2014 to examine the main determinants of loan loss provisions. In addition, we tested how the latest crisis has affected provisioning behaviour of the banks. We find that loan loss provisions of banks are driven by non-discretionary components and economic fluctuations. Furthermore, we find a positive and significant result between earnings before interest, taxes and provisions and loan loss provisions, thus confirming the income smoothing hypothesis. Our estimated results do not support the capital management and signalling hypotheses. We also find that the global crisis has contributed significantly to the procyclicality of loan loss provisioning in Albania and banks continued to do income smoothing during the crisis.

Some Empirical Evidence of Loan Loss Provisions for Albanian Banks

PhD Candidate, Tor Vergata University, Italy

Journal of Central Banking Theory and Practice

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

{"article-title":"Some Empirical Evidence of Loan Loss Provisions for Albanian Banks"}

In this paper we used a panel of Albanian banks for the period 2004-2014 to examine the main determinants of loan loss provisions. In addition, we tested how...

Some Empirical Evidence of Loan Loss Provisions for Albanian Banks

Online veröffentlicht: 20. Mai 2016

Seitenbereich: 157 - 173

Eingereicht: 16. Dez. 2015

Akzeptiert: 29. Jan. 2016

DOI: https://doi.org/10.1515/jcbtp-2016-0016

Schlüsselwörter
Loan loss provisions, Procyclicality, Income Smoothing, Albanian banks, Dynamic GMM

© 2016 Central Bank of Montenegro

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Some Empirical Evidence of Loan Loss Provisions for Albanian Banks

Online veröffentlicht: 20. Mai 2016

Seitenbereich: 157 - 173

Eingereicht: 16. Dez. 2015

Akzeptiert: 29. Jan. 2016

DOI: https://doi.org/10.1515/jcbtp-2016-0016

SchlüsselwörterLoan loss provisions, Procyclicality, Income Smoothing, Albanian banks, Dynamic GMM

© 2016 Central Bank of Montenegro

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.

Schlüsselwörter
Loan loss provisions, Procyclicality, Income Smoothing, Albanian banks, Dynamic GMM