Examining Managerial Misbehavior in Asian Banks through Loan Loss Provisions*☆

Saona, Paolo; Azad, Md. Abul Kalam

doi:10.1111/ajfs.12307

Cited by 4 publications

(3 citation statements)

References 125 publications

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“…Prior studies demonstrate that earnings management activities are negatively associated with corporate governance mechanisms (Hassan and Ahmed, 2012). Firms in Asian countries show more severe earnings management when they have poor corporate governance (Saona and Azad, 2020). An effective internal corporate governance environment restrains managerial discretion over finance choices (Zalata and Roberts, 2017).…”

Section: Empirical Results and Analysismentioning

confidence: 99%

Does China's Anti‐corruption Campaign Curb Position‐related Consumption? Evidence of Classification Shifting*

Yang

2021

Asia-Pac J of Fin Stud

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This study investigates whether and how China’s anti‐corruption campaign, which was promulgated in 2012, reduces position‐related consumption. It examines data from Chinese A‐share listed companies for the period 2010–2015 using a difference‐in‐differences research design and finds that state‐owned enterprises are more likely to reclassify consumptive cash expenditure to less sensitive accounts by moving the expenditure as items for investing cash outflow after the campaign. This result is more pronounced when the chief executive officer has greater power or when corporate governance is weak. The study contributes to academia and practice by showing that an anti‐corruption ban may have unintended consequences.

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Section: Empirical Results and Analysismentioning

confidence: 99%

Does China's Anti‐corruption Campaign Curb Position‐related Consumption? Evidence of Classification Shifting*

Yang

2021

Asia-Pac J of Fin Stud

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“…Thus, Ben-David et al (2012) argued that, since most institutional depositors make deposits, unlike individual depositors that make deposits and receive loans, institutional depositors are relatively free to move bank deposits. In an indirect analysis of banks' dividend decisions, a study by Saona and Azad (2020) empirically analyzed the agency problem and incentive factors of bank managers in Asian countries. 3 Forti and Schiozer (2015) studied the relationship between dividends and institutional deposits ratios (CD amount held by institutional investors compared to total assets) during the financial crisis for banks in Brazil in which the deposit scale of institutional depositors exceeded one-third of current assets.…”

Section: Previous Studies and Hypothesesmentioning

confidence: 99%

Effect of Institutional Depositors on Banks' Dividend Policy: Evidence from Korea during the Global Financial Crisis*

Jung¹,

Lee

Park

2022

Asia-Pac J of Fin Stud

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This study investigates the motive for dividends by examining the relationship between dividends and banks' institutional depositors during the global financial crisis. The results indicate that during the financial crisis, the higher the deposit ratio of institutional depositors to the total insured deposits was, the lower the dividend payments were. This may be attributable to the fact that during the financial crisis, banks significantly reduced their dividends because they were under close monitoring due to the fear that institutional depositors would overreact to disadvantageous policy and cause a bank run.

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“…A commercial bank is considered as a liaison that generates money from savers with excess supply for onward lending to investors and consumers in need [1,2]. Therefore, commercial banks bridges disproportionate information gaps amongst players in the financial market [3]. Various scholars and experts have averred that decisions on monetary policies are conveyed through various monetary policy transmission channels like lending concurrently to the economy [4][5][6].…”

Section: Introduction 11 Background To the Studymentioning

confidence: 99%

Assessment of Loan Portfolio Quality on Financial Performance of Commercial Banks in Kenya

Muratenyi

Olando

2022

AJEBA

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Deteriorating loan portfolio quality is negatively impacting the financial performance of commercial banks in Kenya. Though, Kenya’s banking sector is well established and plays key part in developing county’s economy, it is facing constraints in terms of absolute growth due to this declining loan portfolio quality. Consequently, stakeholders of these commercial banks especially creditors, depositors and shareholders are incurring huge financial losses in absolute terms on their deterioration. Although, there are studies that have established the factors that affect commercial banks’ financial performance, until the time of the study there were unresolved issues. This calls for commercial banks need to be proactive like modernizing their risk mitigation measures to more precise measures to deal with expected credit losses. Banks need to change in this time of enhanced financial information, computing power and data analytics for best-in-class fair projection of credit risk for tangible competitive benefits. Study has demonstrated need for robust approach to commercial banks’ lending in dynamic financial markets for sustainable commercial banking financial performance in Kenya. Study aimed at assessing loan portfolio quality on financial performance of commercial banks in Kenya. Study objectives were to: determine significance of loan loss provision on financial performance of commercial banks in Kenya, evaluate allowance for loan loss impact on financial performance of commercial banks in Kenya and gauge bearing of gross impaired loans and advances on financial performance of commercial banks in Kenya. Researcher classified loan portfolio quality indicators as independent variables, regulatory frameworks, market and infrastructural dynamics as intervening variables, and measures of financial performance of return on assets and equity of commercial banks in Kenya as dependent variables. Research utilized descriptive design using percentages, mean, standard deviation, correlations, and panel data regression model. Researcher narrowed down targeted population to 38 fully operational commercial banks in Kenya by end of year 2020. Study applied census approach and relied on published audited financial reports. Researcher used document review secondary data collection tool and analysed data using SPSS program Version 24.0 supported by Microsoft excel windows 2010. Tables and figures were used to present study outcome. There was largely positive significant correlation between each independent and dependent variable proxies. Although on contrary, allowance for loan loss and gross impaired loans and advances association with return on equity were positive and negative insignificant correspondingly. Study general conclusion was that loan portfolio quality largely had positive significant association with Kenya’s commercial banks’ financial performance. Ccoefficient of determination of return on assets and return on equity were 0.1620 and 0.0363 respectively. That meant loan portfolio quality was responsible for 16.20% and 3.63% change in Kenya’s commercial banks’ financial performance in terms of return on assets and equity respectively. Overall, it is resolved, loan portfolio quality parameters; loan loss provision, allowance for loan loss and gross impaired loans and advances are determinants of financial performance (return on assets return on equity) of Commercial banks in Kenya.The study recommends management of these banks need to vigorously pursue measures to effectively manage loan portfolio quality to realise rising returns on assets and equity.

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Examining Managerial Misbehavior in Asian Banks through Loan Loss Provisions*☆

Cited by 4 publications

References 125 publications

Does China's Anti‐corruption Campaign Curb Position‐related Consumption? Evidence of Classification Shifting*

Does China's Anti‐corruption Campaign Curb Position‐related Consumption? Evidence of Classification Shifting*

Effect of Institutional Depositors on Banks' Dividend Policy: Evidence from Korea during the Global Financial Crisis*

Assessment of Loan Portfolio Quality on Financial Performance of Commercial Banks in Kenya

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