Income smoothing through loan loss provisions in Asia–Pacific commercial banks: the role of managerial ability

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dc.contributor.authorDuy Le, Minh
dc.contributor.authorNhan Dinh, Thanh
dc.date.accessioned2026-04-15T23:42:56Z
dc.date.issued2025-12-01
dc.description.abstractPurpose: This research aims to answer the question of to what extent managerial ability (MA) impacts the level of employing income smoothing (IS) through loan loss provision (LLP) and how this influences the banks’ financial performance. Design/methodology/approach: The research confirms LLPs used to smooth income through the relationship between LLPs and pre-provisioning income in Asia–Pacific banks from 2012 to 2021. Then, it explores the role of managerial ability in IS behavior by using a two-stage procedure: estimating the profit efficiency by employing a four-error stochastic frontier analysis (SFA) and generating MA by calculating residuals from regressing profit efficiency on bank-specific factors. Next, it explores the relationship between IS, managerial ability and banks’ performance. Findings: There is IS through LLP among Asia–Pacific banks, and high-ability managers generally have no special taste in utilizing IS. However, these situations could be modified by contexts such as bank types, profitability levels, credit risk or economic conditions. Besides, talented managers are expected to propose a positive impact on performance in case they use discretionary LLP as a tool of IS. Originality/value: This study is among the first to discover IS behavior and its association with MA and performance in the banking industry and Asia–Pacific region. Furthermore, a four-error SFA can solve the problems of inability and improve the measurement framework of managerial ability measurement. The research also enhances the understanding of upper echelon theory.
dc.formatapplication/pdf
dc.identifier.citationDuy Le, M., & Nhan Dinh, T. (2025). Income smoothing through loan loss provisions in Asia–Pacific commercial banks: the role of managerial ability. Journal of Economics, Finance and Administrative Science, 30(60), 1. Retrieved from https://revistas.esan.edu.pe/index.php/jefas/article/view/859
dc.identifier.doihttps://doi.org/10.1108/JEFAS-09-2024-0303
dc.identifier.urihttps://hdl.handle.net/20.500.12640/4941
dc.languageInglés
dc.language.isoeng
dc.publisherUniversidad ESAN
dc.publisher.countryPE
dc.rightshttps://purl.org/coar/access_right/c_abf2
dc.rightsAttribution 4.0 Internationalen
dc.rights.urihttp://creativecommons.org/licenses/by/4.0/
dc.subjectEarnings managementen_EN
dc.subjectIncome smoothingen_EN
dc.subjectLoans loss provisionen_EN
dc.subjectManagerial abilityen_EN
dc.subjectPerformanceen_EN
dc.subjectAsian–Pacific banksen_EN
dc.subjectGestión de gananciases_ES
dc.subjectSuavización de ingresoses_ES
dc.subjectProvisión para pérdidas crediticiases_ES
dc.subjectCapacidad gerenciales_ES
dc.subjectDesempeñoes_ES
dc.subjectBancos de Asia y el Pacíficoes_ES
dc.subject.ocdehttps://purl.org/pe-repo/ocde/ford#5.02.04
dc.titleIncome smoothing through loan loss provisions in Asia–Pacific commercial banks: the role of managerial ability
dc.typehttps://purl.org/coar/resource_type/c_6501
dc.type.otherArtículo
dc.type.versionhttp://purl.org/coar/version/c_970fb48d4fbd8a85
local.acceso.esanAcceso abierto
oaire.citation.endPage384
oaire.citation.issue60
oaire.citation.startPage364
oaire.citation.titleJournal of Economics, Finance and Administrative Science
oaire.citation.volume30

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JEFAS Vol. 30 Nº 60 (2025)