The Impact of Earnings variability and Regulatory Measures on Income Smoothing: Evidence from Panel Regression

dc.authorscopusid57219853783
dc.authorscopusid57219852737
dc.authorscopusid56925387600
dc.authorscopusid56023024000
dc.authorwosidSaiti, Buerhan/C-8168-2017
dc.contributor.authorMalik, Amino
dc.contributor.authorAziz, Haroon
dc.contributor.authorSaiti, Buerhan
dc.contributor.authorDin, Shahab Ud
dc.contributor.authorUluyol, Burhan
dc.date.accessioned2022-03-04T19:12:07Z
dc.date.available2022-03-04T19:12:07Z
dc.date.issued2021
dc.departmentİZÜ
dc.description.abstractThis study investigates the impact of variability in earnings, stringent regulatory measures and the trend of extending loans while keeping in view deposit ratio on income smoothening practices for a sample of 20 commercial banks listed on the Pakistan Stock Exchange (PSX) from the year 2010 to 2017. The likelihood of smoothing activities is measured through its widely used proxy, i.e. loan loss provisions (LLPs). Moreover, earnings before tax and provisions (EBTP) and loan to deposit ratio (LD) have been incorporated to determine the impact of earnings and loans to deposit ratio on income smoothening. We find that commercial banks are less likely to manage earnings through smoothening practices, which shows that commercial banks adhere to regulatory restrictions. This is further supported by the fact that income smoothing activities decrease as a result of the increase in capital adequacy ratios after the imposition of stringent rules, which exert greater regulatory pressure on banks, whereas the pace of income smoothing increases as a result of an increase in loans to deposit ratio, which reveals that banks take credit risk but manage within the ambit of regulatory restrictions. Based on the findings, we argue that the imposition of regulatory restrictions through the State Bank of Pakistan (SBP) has not only discouraged income smoothening through loan loss provisions but also enhances reporting quality. The results of this study provide useful insights for investors, creditors and stakeholders.
dc.identifier.doi10.2478/jcbtp-2021-0009
dc.identifier.endpage201
dc.identifier.issn1800-9581
dc.identifier.issn2336-9205
dc.identifier.issue1
dc.identifier.orcidSaiti, Buerhan/0000-0002-9984-489X
dc.identifier.scopus2-s2.0-85100751168
dc.identifier.scopusqualityQ2
dc.identifier.startpage183
dc.identifier.urihttps://doi.org/10.2478/jcbtp-2021-0009
dc.identifier.urihttps://hdl.handle.net/20.500.12436/3085
dc.identifier.volume10
dc.identifier.wosWOS:000625570900009
dc.identifier.wosqualityN/A
dc.indekslendigikaynakWeb of Science
dc.indekslendigikaynakScopus
dc.language.isoen
dc.publisherSciendo
dc.relation.ispartofJournal of Central Banking Theory and Practice
dc.relation.publicationcategoryMakale - Uluslararası Hakemli Dergi - Kurum Öğretim Elemanı
dc.rightsinfo:eu-repo/semantics/openAccess
dc.subjectincome smoothing
dc.subjectearnings variability
dc.subjectregulatory measures
dc.subjectcapital adequacy ratio
dc.subjectloan to deposit ratio
dc.subjectLOAN-LOSS PROVISIONS
dc.subjectBANK-SPECIFIC DETERMINANTS
dc.subjectNON-PERFORMING LOANS
dc.subjectEMPIRICAL-EVIDENCE
dc.subjectBEHAVIOR
dc.subjectMANAGEMENT
dc.subjectRISK
dc.titleThe Impact of Earnings variability and Regulatory Measures on Income Smoothing: Evidence from Panel Regression
dc.typeArticle
dspace.entity.typePublication
relation.isAuthorOfPublication79ecf08a-7561-4e50-b912-1eb6ba47704b
relation.isAuthorOfPublication.latestForDiscovery79ecf08a-7561-4e50-b912-1eb6ba47704b

Dosyalar