{"id":7289,"date":"2024-02-09T01:44:54","date_gmt":"2024-02-09T00:44:54","guid":{"rendered":"https:\/\/frjournal.eu\/journal\/?p=7289"},"modified":"2024-02-09T01:44:54","modified_gmt":"2024-02-09T00:44:54","slug":"what-drives-discretionary-loan-loss-provisions-the-role-of-banks-business-model-listing-status-and-covid-19-crisis-in-the-european-banking-sector","status":"publish","type":"post","link":"https:\/\/frjournal.eu\/journal\/2024\/02\/09\/what-drives-discretionary-loan-loss-provisions-the-role-of-banks-business-model-listing-status-and-covid-19-crisis-in-the-european-banking-sector\/","title":{"rendered":"What drives discretionary loan loss provisions? The role of banks\u2019 business model, listing status and COVID-19 crisis in the European banking sector"},"content":{"rendered":"<p>Alessandra Allini, Fiorenza Meucci, Flavio Spagnuolo, Annamaria Zampella \/ Financial Reporting \/ 2-2023<\/p>\n<hr \/>\n<p class=\"fs-7\">Purpose: This study examines whether banks\u2019 business models and listing sta-tus drive the discretionary use of loan loss provisions (LLPs) under the Interna-tional Financial Reporting Standard (IFRS) 9 &#8220;Financial Instruments&#8221;. Design\/methodology\/approach: Ordinary least squares regression is per-formed on a sample of 5,147 listed and unlisted European banks for the 2018-2021 period. Findings: The main results show that after Expected Credit Loss (ECL) im-plementation, banks are prone to manage their earnings via LLPs. In detail, origi-nate-to-hold and listed banks use LLPs to manage their earnings more strongly than originate-to-distribute and unlisted banks. Further, during the financial crisis due to the COVID-19 pandemic, European banks tended to manage earnings more than during the pre-crisis period. Originality\/value: This study contributes to the existing literature by expand-ing research on LLPs and highlighting ex-ante factors that might influence banks\u2019 provisioning behavior, such as their listing status and business model. Practical implications: This study provides useful insights for regulators and accounting setters in making informed decisions regarding provisioning policies, even during periods of turmoil.<\/p>\n<p>&nbsp;<\/p>\n<hr \/>\n<div class=\"fusion-button-wrapper fusion-aligncenter\"><style type=\"text\/css\" scoped=\"scoped\">.fusion-button.button-1 .fusion-button-text, .fusion-button.button-1 i {color:#ffffff;}.fusion-button.button-1 {border-width:0px;border-color:#ffffff;}.fusion-button.button-1 .fusion-button-icon-divider{border-color:#ffffff;}.fusion-button.button-1:hover .fusion-button-text, .fusion-button.button-1:hover i,.fusion-button.button-1:focus .fusion-button-text, .fusion-button.button-1:focus i,.fusion-button.button-1:active .fusion-button-text, .fusion-button.button-1:active{color:#ffffff;}.fusion-button.button-1:hover, .fusion-button.button-1:focus, .fusion-button.button-1:active{border-width:0px;border-color:#ffffff;}.fusion-button.button-1:hover .fusion-button-icon-divider, .fusion-button.button-1:hover .fusion-button-icon-divider, .fusion-button.button-1:active .fusion-button-icon-divider{border-color:#ffffff;}.fusion-button.button-1{width:auto;}<\/style><a class=\"fusion-button button-flat fusion-button-round button-large button-default button-1\" target=\"_blank\" rel=\"noopener noreferrer\" href=\"https:\/\/francoangeli.it\/riviste\/articolo\/74346\"><span class=\"fusion-button-text\">Read Article<\/span><\/a><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Alessandra Allini, Fiorenza Meucci, Flavio Spagnuolo, Annamaria Zampella \/ Financial Reporting \/ 2-2023 Purpose: This study examines whether banks\u2019 business models and listing sta-tus drive the discretionary use of loan loss provisions (LLPs) under the Interna-tional Financial Reporting Standard (IFRS) 9 &#8220;Financial Instruments&#8221;. Design\/methodology\/approach: Ordinary least squares regression is per-formed on a sample of 5,147 [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"quote","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[30,1],"tags":[53,149,500,499],"class_list":["post-7289","post","type-post","status-publish","format-quote","hentry","category-browse-the-journal","category-financial-reporting","tag-business-model","tag-earnings-management","tag-listing-status","tag-loan-loss-provisions","post_format-post-format-quote"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>What drives discretionary loan loss provisions? 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Design\/methodology\/approach: Ordinary least squares regression is per-formed on a sample of 5,147 [&hellip;]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/frjournal.eu\/journal\/2024\/02\/09\/what-drives-discretionary-loan-loss-provisions-the-role-of-banks-business-model-listing-status-and-covid-19-crisis-in-the-european-banking-sector\/\" \/>\n<meta property=\"og:site_name\" content=\"Financial Reporting Journal\" \/>\n<meta property=\"article:published_time\" content=\"2024-02-09T00:44:54+00:00\" \/>\n<meta name=\"author\" content=\"Laura Bini\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Laura Bini\" \/>\n\t<meta name=\"twitter:label2\" content=\"Estimated reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"1 minute\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/frjournal.eu\\\/journal\\\/2024\\\/02\\\/09\\\/what-drives-discretionary-loan-loss-provisions-the-role-of-banks-business-model-listing-status-and-covid-19-crisis-in-the-european-banking-sector\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/frjournal.eu\\\/journal\\\/2024\\\/02\\\/09\\\/what-drives-discretionary-loan-loss-provisions-the-role-of-banks-business-model-listing-status-and-covid-19-crisis-in-the-european-banking-sector\\\/\"},\"author\":{\"name\":\"Laura Bini\",\"@id\":\"https:\\\/\\\/frjournal.eu\\\/journal\\\/#\\\/schema\\\/person\\\/d92fb46103bc536c63f8000f2cb595ac\"},\"headline\":\"What drives discretionary loan loss provisions? 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