Do delays in expected loss recognition affect banks' willingness to lend?

• 成果类型: Article
• 署名作者: Beatty, Anne; Liao, Scott
• 署名单位: University System of Ohio; Ohio State University; University of Toronto
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2011.02.002
• 发表日期: 2011
• 关键词: management; transmission; conservatism; PROVISIONS; QUALITY

摘要

Banks can decrease their future capital inadequacy concerns by reducing lending. The capital crunch theory predicts that lending is particularly sensitive to regulatory capital constraints during recessions, when regulatory capital declines and external-financing frictions increase. Regulators and policy makers argue that the current loan loss provisioning rules magnify this pro-cyclicality. Exploiting variation in the delay in expected loss recognition under the current incurred loss model, we find that reductions in lending during recessionary relative to expansionary periods are lower for banks that delay less. We also find that smaller delays reduce the recessionary capital crunch effect. These results hold across management quality partitions. (C) 2011 Elsevier B.V. All rights reserved.