Earnings quality and performance in the banking industry : a profit frontier approach
Prior Jiménez, Diego (Universitat Autònoma de Barcelona. Departament d'Economia de l'Empresa)
Tortosa-Ausina, Emili (Universidad Jaume I)
Illueca, Manuel (Universidad Jaume I)
García-Alcober, Mª Pilar (Universidad CEU-Cardenal Herrera)
Universitat Autònoma de Barcelona. Departament d'Empresa

Imprint: Universitat Autònoma de Barcelona. Departament d'Economia de l'Empresa 2014
Description: 51 p.
Abstract: The analysis of efficiency and productivity in banking has received a great deal of attention for almost three decades now. However, most of the literature to date has not explicitly accounted for risk when measuring efficiency. We propose an analysis of profit efficiency taking into account how the inclusion of a variety of bank risk measures might bias efficiency scores. Our measures of risk are partly inspired by the literature on earnings management and earnings quality, keeping in mind that loan loss provisions, as a generally accepted proxy for risk, can be adjusted to manage earnings and regulatory capital. We also consider some variants of traditional models of profit efficiency where different regimes are stipulated so that financial institutions can be evaluated in different dimensions—i. e. , prices, quantities, or prices and quantities simultaneously. We perform this analysis on the Spanish banking industry, whose institutions have been deeply affected by the current international financial crisis, and where re-regulation is taking place. Our results can be explored in multiple dimensions but, in general, they indicate that the impact of earnings management on profit efficiency is of less magnitude than what might a priori be expected, and that on the whole, savings banks have performed less well than commercial banks. However, savings banks are adapting to the new regulatory scenario and rapidly catching up with commercial banks, especially in some dimensions of performance.
Rights: L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons: Creative Commons
Language: Anglès.
Series: Documents de treball
Series: Document de treball (Universitat Autònoma de Barcelona. Departament d'Economia de l'Empresa) ; 14/5
Document: workingPaper
Subject: Bancs ; Beneficis ; Risc (Economia) ; Bank ; Efficiency ; Loan loss provision ; Profit ; Risk

Adreça alternativa: https://hdl.handle.net/2072/251112

51 p, 1.2 MB

The record appears in these collections:
Research literature > Working papers

 Record created 2015-06-25, last modified 2019-06-17

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