Determinants of the Loan Loss Allowance: Some Cross-Country Comparisons
AbstractThis paper analyzes the determinants of banks' loan loss allowance for samples of U.S. banks and three non-U.S. samples: a group of 21 countries, Canada, and Japan. The model includes fundamental (or nondiscretionary) determinants of the allowance, such as nonperforming loans, and discretionary determinants, such as income before the loan loss provision. The results suggest that the loan loss allowance is sensitive to preprovision income in almost all samples. However, the results also suggest that some variables thought to reflect fundamental factors in U.S. analysis, such as net charge-offs, are not significant factors for non-U.S. banks. Copyright 2004 by the Eastern Finance Association.
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Bibliographic InfoArticle provided by Eastern Finance Association in its journal The Financial Review.
Volume (Year): 39 (2004)
Issue (Month): 1 (02)
Other versions of this item:
- Hasan, Iftekhar & Wall , Larry D., 2003. "Determinants of the loan loss allowance: some cross-country comparisons," Research Discussion Papers 33/2003, Bank of Finland.
- Iftekhar Hasan & Larry D. Wall, 2004. "Determinants of the loan loss allowance: some cross-country comparisons," Finance 0404018, EconWPA.
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
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