TY - JOUR

T1 - Loan-loss provisions, earnings management, and capital management by Russian banks

T2 - the impact of changes in banking regulation and oversight

AU - Nikulin, Egor

AU - Downing, Jeff

N1 - Nikulin, E. LOAN-LOSS PROVISIONS, EARNINGS MANAGEMENT, AND CAPITAL MANAGEMENT BY RUSSIAN BANKS: THE IMPACT OF CHANGES IN BANKING REGULATION AND OVERSIGHT / E. Nikulin, J. Downing // Eurasian Business Review. - 2020.

PY - 2021

Y1 - 2021

N2 - This paper compares earnings management (EM) and capital management (CM) by Russian banks before and after changes in banking regulation and oversight in Russia. In Russia, in recent years, the Central Bank of the Russian Federation has imposed new regulations on banks. In addition, the Central Bank has strengthened its oversight by revoking the license of a large number of banks. Hence, we compare EM and CM before and after these changes in regulation and oversight. We focus on the use of loan-loss provisions (LLPs) for EM and CM. We have three main results. First, we find that banks use LLPs for EM both before and after these changes in regulation and oversight. However, banks’ use of LLPs for EM is similar pre- and post-changes. Second, for the entire sample period, we find mixed evidence of the relationship between capital and LLPs. However, post-changes, the relationship between capital and LLPs is more negative relative to pre-changes. This result is consistent with stronger oversight by regulators post-changes. Third, the difference in CM post-changes relative to pre-changes is different for government-owned banks than for private banks.

AB - This paper compares earnings management (EM) and capital management (CM) by Russian banks before and after changes in banking regulation and oversight in Russia. In Russia, in recent years, the Central Bank of the Russian Federation has imposed new regulations on banks. In addition, the Central Bank has strengthened its oversight by revoking the license of a large number of banks. Hence, we compare EM and CM before and after these changes in regulation and oversight. We focus on the use of loan-loss provisions (LLPs) for EM and CM. We have three main results. First, we find that banks use LLPs for EM both before and after these changes in regulation and oversight. However, banks’ use of LLPs for EM is similar pre- and post-changes. Second, for the entire sample period, we find mixed evidence of the relationship between capital and LLPs. However, post-changes, the relationship between capital and LLPs is more negative relative to pre-changes. This result is consistent with stronger oversight by regulators post-changes. Third, the difference in CM post-changes relative to pre-changes is different for government-owned banks than for private banks.

KW - Banking regulation

KW - Capital management

KW - Earnings management

KW - Loan-loss provisions

KW - QUALITY

KW - PROCYCLICALITY

KW - IFRS

KW - SCOPUS

KW - WoS

KW - РИНЦ

UR - http://www.scopus.com/inward/record.url?scp=85085286605&partnerID=8YFLogxK

UR - https://www.mendeley.com/catalogue/50c0cc96-482e-3fd9-9e54-17ddd2212eba/

U2 - 10.1007/s40821-020-00163-9

DO - 10.1007/s40821-020-00163-9

M3 - Article

AN - SCOPUS:85085286605

VL - 11

SP - 659

EP - 677

JO - Eurasian Business Review

JF - Eurasian Business Review

SN - 1309-4297

ER -