Loan Growth Strategies and Income Smoothing in Central European Banks
Loan Growth Strategies and Income Smoothing in Central European Banks
Author(s): Dorota SkałaSubject(s): Business Economy / Management, Evaluation research, Transformation Period (1990 - 2010), Present Times (2010 - today), Financial Markets
Published by: Wydawnictwo Naukowe Uniwersytetu Marii Curie-Sklodowskiej
Keywords: income smoothing; Central European banks; loan growth;
Summary/Abstract: In this paper, we analyse the process of income smoothing in Central European banks in the context of expansion strategies of banks. Using a sample of 216 banks in the period 2003–2014, we demonstrate that income smoothing is a strategy most pursued by low-growth financial institutions. This result is particularly visible when the relative expansion rate at local markets is taken into account. High-growth banks are likely to have less foreseeable income streams, loan volumes and loan quality. As income smoothing is a long-term process, the lack of predictability could make forward-making reserve policies more challenging.
Journal: Annales Universitatis Mariae Curie-Skłodowska, Sectio H Oeconomia
- Issue Year: LII/2018
- Issue No: 1
- Page Range: 161-169
- Page Count: 9
- Language: English