Income smoothing management and loan loss provisions in the banking system
Alba Gómez-Ortega,
Ana Licerán-Gutiérrez,
Maria de la Paz Horno-Bueno
Abstract:PurposeThe “public interest” of financial institutions was used as an argument to intervene in accounting practices. The Bank of Spain's standard was not compatible with International Accounting Standard (henceforth IAS) 39 and the Spanish banking sector had become one of the most provisioned in Europe. This makes it an interesting case study of the relationship between provisioning and income smoothing. The 2008 financial crisis revealed that provisions were insufficient and a reinforcement regulation process… Show more
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