Loan Loss Provisions and Lending Behavior of Banks: Do Information Sharing and Borrower Legal Rights Matter?

Abstract : In this paper, we examine the role of information sharing and borrower legal rights in affecting the procyclical effect of bank loan loss provisions. Based on a sample of Asian banks, our empirical results highlight that higher non-discretionary provisions reduce loan growth and hence, non-discretionary provisions are procyclical. A closer investigation suggests that better information sharing through public credit registries managed by central banks, but not private credit bureaus managed by the private sector, might substitute the role of a dynamic provisioning system in mitigating the procyclicality of non-discretionary provisions. We also document that higher discretionary provisions in countries with stronger legal rights of borrowers may temper the procyclical effect of non-discretionary provisions. However, these findings only hold for small banks. This suggests that the implementation of a dynamic provisioning system to mitigate the procyclicality of non-discretionary provisions is more crucial for large banks, because such procyclicality cannot be offset by strengthening credit market environments through better information sharing and legal rights of borrowers.
Type de document :
Pré-publication, Document de travail
Liste complète des métadonnées

Littérature citée [12 références]  Voir  Masquer  Télécharger
Contributeur : Thierno Barry <>
Soumis le : mardi 8 mars 2016 - 13:01:28
Dernière modification le : mercredi 28 février 2018 - 17:06:02
Document(s) archivé(s) le : dimanche 13 novembre 2016 - 10:34:23


Fichiers produits par l'(les) auteur(s)




Wahyoe Soedarmono, Amine Tarazi, Agusman Agusman, Gary S. Monroe, Dominic Gasbarro. Loan Loss Provisions and Lending Behavior of Banks: Do Information Sharing and Borrower Legal Rights Matter?. 2016. ⟨hal-01284978⟩



Consultations de la notice


Téléchargements de fichiers