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Effects of loan loss provisions on growth in bank lending : some international comparisons

Abstract : A dynamic provisioning system is one of the instruments that regulators could use for introducing counter-cyclicality into prudential regulation. The potential e¤ective-ness of such instrument depends on how far actual provisioning practices exacerbate growth in bank lending. We therefore investigate the e¤ects of loan loss provisions on growth in bank lending, making a di¤erence between non discretionary and dis-cretionary loan loss provisions. International comparisons are made between …ve ge-ographical areas : Europe, Japan, the United-States, Central & South American and South & East Asia. Except for Japanese banks, we …nd a negative and signi…cant ef-fect of non discretionary loan loss provisions on growth in bank lending. This common feature lead us to conclude that banking regulators could reach a consensus concerning the bene…cial aspects of a dynamic provisioning system.
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  • HAL Id : hal-01098963, version 1

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Vincent Bouvatier, Laetitia Lepetit. Effects of loan loss provisions on growth in bank lending : some international comparisons. International Economics, Elsevier, 2012, 132, pp.91-116. ⟨hal-01098963⟩

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