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Bank loan loss provisioning during election years in Nigeria

Author

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  • Ozili, Peterson K

Abstract

The paper investigates the behavior of loan loss provisions during election years in Nigeria. Election events create uncertainties in the business environment in Nigeria which can increase the credit risk that banks face. The findings reveal that the banking sector had high loan loss provisions when it is under-capitalised during election years. However, the election year did not have a significant effect on the level of loan loss provisions in the Nigerian banking sector.

Suggested Citation

  • Ozili, Peterson K, 2019. "Bank loan loss provisioning during election years in Nigeria," MPRA Paper 96704, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:96704
    as

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    File URL: https://mpra.ub.uni-muenchen.de/96704/1/MPRA_paper_96704.pdf
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    References listed on IDEAS

    as
    1. Laeven, Luc & Majnoni, Giovanni, 2003. "Loan loss provisioning and economic slowdowns: too much, too late?," Journal of Financial Intermediation, Elsevier, vol. 12(2), pages 178-197, April.
    2. Domenico Curcio & Iftekhar Hasan, 2015. "Earnings and capital management and signaling: the use of loan-loss provisions by European banks," The European Journal of Finance, Taylor & Francis Journals, vol. 21(1), pages 26-50, January.
    3. repec:bkr:journl:v:78:y:2019:i:1:p:89-106 is not listed on IDEAS
    4. repec:bor:bistre:v:17:y:2017:i:3:p:144-163 is not listed on IDEAS
    5. Bikker, J.A. & Metzemakers, P.A.J., 2005. "Bank provisioning behaviour and procyclicality," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 15(2), pages 141-157, April.
    6. Stergios Leventis & Panagiotis Dimitropoulos & Asokan Anandarajan, 2011. "Loan Loss Provisions, Earnings Management and Capital Management under IFRS: The Case of EU Commercial Banks," Journal of Financial Services Research, Springer;Western Finance Association, vol. 40(1), pages 103-122, October.
    7. repec:eee:finlet:v:25:y:2018:i:c:p:239-243 is not listed on IDEAS
    8. Michael Callen & James D. Long, 2015. "Institutional Corruption and Election Fraud: Evidence from a Field Experiment in Afghanistan," American Economic Review, American Economic Association, vol. 105(1), pages 354-381, January.
    9. repec:eee:jocaae:v:12:y:2016:i:2:p:176-190 is not listed on IDEAS
    10. Balla, Eliana & Rose, Morgan J., 2015. "Loan loss provisions, accounting constraints, and bank ownership structure," Journal of Economics and Business, Elsevier, vol. 78(C), pages 92-117.
    11. Ahmed, Anwer S. & Takeda, Carolyn & Thomas, Shawn, 1999. "Bank loan loss provisions: a reexamination of capital management, earnings management and signaling effects," Journal of Accounting and Economics, Elsevier, vol. 28(1), pages 1-25, November.
    12. Ozili, Peterson K, 2015. "Loan Loss Provisioning, Income Smoothing, Signaling, Capital Management and Procyclicality: Does IFRS Matter? Empirical Evidence from Nigeria," MPRA Paper 68350, University Library of Munich, Germany.
    13. Ozili, Peterson K, 2017. "Bank Loan Loss Provisions Research: A Review," MPRA Paper 76495, University Library of Munich, Germany.
    14. Dupas, Pascaline & Robinson, Jonathan, 2012. "The (hidden) costs of political instability: Evidence from Kenya's 2007 election crisis," Journal of Development Economics, Elsevier, vol. 99(2), pages 314-329.
    15. Ozili, Peterson K, 2017. "Bank Loan Loss Provisions, Investor Protection and the Macroeconomy," MPRA Paper 80147, University Library of Munich, Germany.
    16. Ozili, Peterson K, 2020. "Bank loan loss provisioning during election years: cross-country evidence," MPRA Paper 96639, University Library of Munich, Germany.
    17. Kanagaretnam, Kiridaran & Lobo, Gerald J. & Yang, Dong-Hoon, 2005. "Determinants of signaling by banks through loan loss provisions," Journal of Business Research, Elsevier, vol. 58(3), pages 312-320, March.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    loan loss provisions; income smoothing; election; Nigeria; banks; financial reporting; credit risk;

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • 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
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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