Banks’ Income Smoothing in the Basel Period: Evidence from European Union

  • Konstantinos VasilakopoulosEmail author
  • Christos Tzovas
  • Apostolos A. Ballas
Conference paper
Part of the Springer Proceedings in Business and Economics book series (SPBE)


This paper investigates whether European banks smooth income and regulatory capital ratios through loan loss provisions in the Basel period. Using a sample of 1064 bank-year observations from 26 European Union countries, we find that banks use loan loss provisions in order to smooth income after the adoption of IFRS and the Basel regulatory framework. However, our results do not support the regulatory capital management hypothesis. In addition, we find that the risk level and direct market discipline affect bank managers’ accounting discretion. On the other hand, we do not find evidence to support the hypothesis that the legal environment plays a substantial role in banks’ accounting policy decisions.


Banks Provisions IFRS Regulation Capital 


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Copyright information

© Springer Nature Switzerland AG 2019

Authors and Affiliations

  • Konstantinos Vasilakopoulos
    • 1
    Email author
  • Christos Tzovas
    • 1
  • Apostolos A. Ballas
    • 1
  1. 1.Athens University of Economics and BusinessAthensGreece

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