Professor Panayiotis Andreou panayiotis.andreou@durham.ac.uk
Professor
Professor Panayiotis Andreou panayiotis.andreou@durham.ac.uk
Professor
I. Cooper
C. Louca
Professor Dennis Philip dennis.philip@durham.ac.uk
Professor
Banks that follow conditional conservatism in their loan loss accounting treatments benefit from a reduction in crash risk. The key discretionary loan loss accounting channels are provisions and allowances. We show that conditional conservatism reduces crash risk of small banks during periods of credit contraction and boom. Interestingly, for large banks, crash risk is not reduced by more conservative accounting even for those with higher levels of opacity. Hence regulation prompting for more conservative bank loan loss accounting does not present a significant opportunity to limit systemic effects arising from abrupt price declines in the stocks of large banks.
Journal Article Type | Article |
---|---|
Acceptance Date | Mar 8, 2017 |
Online Publication Date | Mar 18, 2017 |
Publication Date | Mar 18, 2017 |
Deposit Date | Feb 22, 2017 |
Publicly Available Date | Mar 18, 2019 |
Journal | British Accounting Review |
Print ISSN | 0890-8389 |
Publisher | Elsevier |
Peer Reviewed | Peer Reviewed |
Volume | 49 |
Issue | 5 |
Pages | 474-492 |
DOI | https://doi.org/10.1016/j.bar.2017.03.002 |
Public URL | https://durham-repository.worktribe.com/output/1393486 |
Accepted Journal Article
(885 Kb)
PDF
Publisher Licence URL
http://creativecommons.org/licenses/by-nc-nd/4.0/
Copyright Statement
© 2017 This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/
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