Do Malaysian banks manage earnings through loan loss provisions? / Abd. Ghafar Ismail, Roselee Shah Shaharudin and Ananda R. Samudhram

The 1988 Basle regulations are meant to synchronise banking regulations worldwide and add to the stability of the global banking system. Basle II, due to be released in 2006, addresses some of the flaws in the 1988 accord. However, both versions do not close a loophole for managing earnings through...

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Main Authors:	Ismail, Abd. Ghafar, Shaharudin, Roselee Shah, R. Samudhram, Ananda
Format:	Article
Language:	English
Published:	Faculty of Accountancy 2005
Subjects:	Bank loans. Bank credit. Commercial loans Malaysia
Online Access:	http://ir.uitm.edu.my/id/eprint/11686/ http://ir.uitm.edu.my/id/eprint/11686/1/AJ_ABD.%20GHAFAR%20ISMAIL%20NARJ%2005.pdf

id	uitm-11686
recordtype	eprints
spelling	uitm-116862016-09-22T04:11:59Z http://ir.uitm.edu.my/id/eprint/11686/ Do Malaysian banks manage earnings through loan loss provisions? / Abd. Ghafar Ismail, Roselee Shah Shaharudin and Ananda R. Samudhram Ismail, Abd. Ghafar Shaharudin, Roselee Shah R. Samudhram, Ananda Bank loans. Bank credit. Commercial loans Malaysia The 1988 Basle regulations are meant to synchronise banking regulations worldwide and add to the stability of the global banking system. Basle II, due to be released in 2006, addresses some of the flaws in the 1988 accord. However, both versions do not close a loophole for managing earnings through discretionary adjustments of the loan loss provisions. Some researchers have found indications of income smoothing through loan loss provisions in banks, but others have concluded otherwise. All of these studies were conducted on banks outside of Malaysia. This study looks specifically at Malaysian banks, and uses a model based on bank-specific and macroeconomic factors that are peculiar to Malaysia. It concludes that Malaysian banks do not smoothen income. The likely reason is that good governance in Malaysian banks is driven more by regulatory measures imposed by the authorities than stock market discipline. Thus bankers do not seem to be concerned with managing earnings to present a rosy picture to investors. However, from a macroeconomic perspective, stacking up loan loss provisions during good times will help to release more credit during downturns in economic cycles, helping to soften the impact of recessions. Further research on whether Malaysian banks conduct capital management, to meet regulatory capital requirements, will help to shed more light on the behaviour of Malaysian banks. Faculty of Accountancy 2005 Article PeerReviewed text en http://ir.uitm.edu.my/id/eprint/11686/1/AJ_ABD.%20GHAFAR%20ISMAIL%20NARJ%2005.pdf Ismail, Abd. Ghafar and Shaharudin, Roselee Shah and R. Samudhram, Ananda (2005) Do Malaysian banks manage earnings through loan loss provisions? / Abd. Ghafar Ismail, Roselee Shah Shaharudin and Ananda R. Samudhram. National Accounting Research Journal, 3 (1). pp. 41-47. ISSN 1675-753X
repository_type	Digital Repository
institution_category	Local University
institution	Universiti Teknologi MARA
building	UiTM Institutional Repository
collection	Online Access
language	English
topic	Bank loans. Bank credit. Commercial loans Malaysia
spellingShingle	Bank loans. Bank credit. Commercial loans Malaysia Ismail, Abd. Ghafar Shaharudin, Roselee Shah R. Samudhram, Ananda Do Malaysian banks manage earnings through loan loss provisions? / Abd. Ghafar Ismail, Roselee Shah Shaharudin and Ananda R. Samudhram
description	The 1988 Basle regulations are meant to synchronise banking regulations worldwide and add to the stability of the global banking system. Basle II, due to be released in 2006, addresses some of the flaws in the 1988 accord. However, both versions do not close a loophole for managing earnings through discretionary adjustments of the loan loss provisions. Some researchers have found indications of income smoothing through loan loss provisions in banks, but others have concluded otherwise. All of these studies were conducted on banks outside of Malaysia. This study looks specifically at Malaysian banks, and uses a model based on bank-specific and macroeconomic factors that are peculiar to Malaysia. It concludes that Malaysian banks do not smoothen income. The likely reason is that good governance in Malaysian banks is driven more by regulatory measures imposed by the authorities than stock market discipline. Thus bankers do not seem to be concerned with managing earnings to present a rosy picture to investors. However, from a macroeconomic perspective, stacking up loan loss provisions during good times will help to release more credit during downturns in economic cycles, helping to soften the impact of recessions. Further research on whether Malaysian banks conduct capital management, to meet regulatory capital requirements, will help to shed more light on the behaviour of Malaysian banks.
format	Article
author	Ismail, Abd. Ghafar Shaharudin, Roselee Shah R. Samudhram, Ananda
author_facet	Ismail, Abd. Ghafar Shaharudin, Roselee Shah R. Samudhram, Ananda
author_sort	Ismail, Abd. Ghafar
title	Do Malaysian banks manage earnings through loan loss provisions? / Abd. Ghafar Ismail, Roselee Shah Shaharudin and Ananda R. Samudhram
title_short	Do Malaysian banks manage earnings through loan loss provisions? / Abd. Ghafar Ismail, Roselee Shah Shaharudin and Ananda R. Samudhram
title_full	Do Malaysian banks manage earnings through loan loss provisions? / Abd. Ghafar Ismail, Roselee Shah Shaharudin and Ananda R. Samudhram
title_fullStr	Do Malaysian banks manage earnings through loan loss provisions? / Abd. Ghafar Ismail, Roselee Shah Shaharudin and Ananda R. Samudhram
title_full_unstemmed	Do Malaysian banks manage earnings through loan loss provisions? / Abd. Ghafar Ismail, Roselee Shah Shaharudin and Ananda R. Samudhram
title_sort	do malaysian banks manage earnings through loan loss provisions? / abd. ghafar ismail, roselee shah shaharudin and ananda r. samudhram
publisher	Faculty of Accountancy
publishDate	2005
url	http://ir.uitm.edu.my/id/eprint/11686/ http://ir.uitm.edu.my/id/eprint/11686/1/AJ_ABD.%20GHAFAR%20ISMAIL%20NARJ%2005.pdf
first_indexed	2023-09-18T22:48:25Z
last_indexed	2023-09-18T22:48:25Z
_version_	1777417380844011520

Do Malaysian banks manage earnings through loan loss provisions? / Abd. Ghafar Ismail, Roselee Shah Shaharudin and Ananda R. Samudhram

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