Loan Loss Provisions, Earnings Smoothing and Capital Management Under IFRS: The Case of Deposit Money Banks in Nigeria

Clement Chiahemba Ajekwe; Adzor Ibiamke; Marie Fagson Silas

doi:doi:10.11648/j.ajmse.20170204.12

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Loan Loss Provisions, Earnings Smoothing and Capital Management Under IFRS: The Case of Deposit Money Banks in Nigeria

Clement Chiahemba Ajekwe, Adzor Ibiamke, Marie Fagson Silas

Published in American Journal of Management Science and Engineering (Volume 2, Issue 4)

Received: 28 June 2017 Accepted: 14 July 2017 Published: 15 August 2017

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Abstract

The paper examines the impact of IFRS adoption on the use of loan loss provisions (LLPs) to manage earnings and capital by listed deposit money banks in Nigeria. The study employed an ex-post facto research design and a sample of fourteen (14) Deposit Money Banks listed on the Nigerian Stock Exchange. Data was obtained from 2009 to 2014 to capture the pre- and post- IFRS adoption periods. Using paired sample t-test, we find quantitative evidence to the effect that there are significant increase in the means of loan loss provisioning, and capital management by Deposit Money Banks in Nigeria in the post IFRS adoption period compared to the pre-IFRS adoption period. However, the levels of earnings smoothing are significantly lower in the post IFRS period. The implication of this finding is that adoption of IFRS improved earnings quality in the sense of reduced earnings smoothing.

Published in	American Journal of Management Science and Engineering (Volume 2, Issue 4)
DOI	10.11648/j.ajmse.20170204.12
Page(s)	58-64
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2017. Published by Science Publishing Group

Keywords

Earnings Smoothing, Capital Management, IFRS, Loan Loss Provision, Nigeria

References

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APA Style

Clement Chiahemba Ajekwe, Adzor Ibiamke, Marie Fagson Silas. (2017). Loan Loss Provisions, Earnings Smoothing and Capital Management Under IFRS: The Case of Deposit Money Banks in Nigeria. American Journal of Management Science and Engineering, 2(4), 58-64. https://doi.org/10.11648/j.ajmse.20170204.12

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ACS Style

Clement Chiahemba Ajekwe; Adzor Ibiamke; Marie Fagson Silas. Loan Loss Provisions, Earnings Smoothing and Capital Management Under IFRS: The Case of Deposit Money Banks in Nigeria. Am. J. Manag. Sci. Eng. 2017, 2(4), 58-64. doi: 10.11648/j.ajmse.20170204.12

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AMA Style

Clement Chiahemba Ajekwe, Adzor Ibiamke, Marie Fagson Silas. Loan Loss Provisions, Earnings Smoothing and Capital Management Under IFRS: The Case of Deposit Money Banks in Nigeria. Am J Manag Sci Eng. 2017;2(4):58-64. doi: 10.11648/j.ajmse.20170204.12

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@article{10.11648/j.ajmse.20170204.12,
  author = {Clement Chiahemba Ajekwe and Adzor Ibiamke and Marie Fagson Silas},
  title = {Loan Loss Provisions, Earnings Smoothing and Capital Management Under IFRS: The Case of Deposit Money Banks in Nigeria},
  journal = {American Journal of Management Science and Engineering},
  volume = {2},
  number = {4},
  pages = {58-64},
  doi = {10.11648/j.ajmse.20170204.12},
  url = {https://doi.org/10.11648/j.ajmse.20170204.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ajmse.20170204.12},
  abstract = {The paper examines the impact of IFRS adoption on the use of loan loss provisions (LLPs) to manage earnings and capital by listed deposit money banks in Nigeria. The study employed an ex-post facto research design and a sample of fourteen (14) Deposit Money Banks listed on the Nigerian Stock Exchange. Data was obtained from 2009 to 2014 to capture the pre- and post- IFRS adoption periods. Using paired sample t-test, we find quantitative evidence to the effect that there are significant increase in the means of loan loss provisioning, and capital management by Deposit Money Banks in Nigeria in the post IFRS adoption period compared to the pre-IFRS adoption period. However, the levels of earnings smoothing are significantly lower in the post IFRS period. The implication of this finding is that adoption of IFRS improved earnings quality in the sense of reduced earnings smoothing.},
 year = {2017}
}

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TY  - JOUR
T1  - Loan Loss Provisions, Earnings Smoothing and Capital Management Under IFRS: The Case of Deposit Money Banks in Nigeria
AU  - Clement Chiahemba Ajekwe
AU  - Adzor Ibiamke
AU  - Marie Fagson Silas
Y1  - 2017/08/15
PY  - 2017
N1  - https://doi.org/10.11648/j.ajmse.20170204.12
DO  - 10.11648/j.ajmse.20170204.12
T2  - American Journal of Management Science and Engineering
JF  - American Journal of Management Science and Engineering
JO  - American Journal of Management Science and Engineering
SP  - 58
EP  - 64
PB  - Science Publishing Group
SN  - 2575-1379
UR  - https://doi.org/10.11648/j.ajmse.20170204.12
AB  - The paper examines the impact of IFRS adoption on the use of loan loss provisions (LLPs) to manage earnings and capital by listed deposit money banks in Nigeria. The study employed an ex-post facto research design and a sample of fourteen (14) Deposit Money Banks listed on the Nigerian Stock Exchange. Data was obtained from 2009 to 2014 to capture the pre- and post- IFRS adoption periods. Using paired sample t-test, we find quantitative evidence to the effect that there are significant increase in the means of loan loss provisioning, and capital management by Deposit Money Banks in Nigeria in the post IFRS adoption period compared to the pre-IFRS adoption period. However, the levels of earnings smoothing are significantly lower in the post IFRS period. The implication of this finding is that adoption of IFRS improved earnings quality in the sense of reduced earnings smoothing.
VL  - 2
IS  - 4
ER  -

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Author Information

Clement Chiahemba Ajekwe

Department of Accounting, Benue State University, Makurdi, Nigeria
Adzor Ibiamke

Department of Accounting, Benue State University, Makurdi, Nigeria
Marie Fagson Silas

Internal Audit Department, Nasarawa State University, Keffi, Nigeria

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APA Style

Clement Chiahemba Ajekwe, Adzor Ibiamke, Marie Fagson Silas. (2017). Loan Loss Provisions, Earnings Smoothing and Capital Management Under IFRS: The Case of Deposit Money Banks in Nigeria. American Journal of Management Science and Engineering, 2(4), 58-64. https://doi.org/10.11648/j.ajmse.20170204.12

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ACS Style

Clement Chiahemba Ajekwe; Adzor Ibiamke; Marie Fagson Silas. Loan Loss Provisions, Earnings Smoothing and Capital Management Under IFRS: The Case of Deposit Money Banks in Nigeria. Am. J. Manag. Sci. Eng. 2017, 2(4), 58-64. doi: 10.11648/j.ajmse.20170204.12

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AMA Style

Clement Chiahemba Ajekwe, Adzor Ibiamke, Marie Fagson Silas. Loan Loss Provisions, Earnings Smoothing and Capital Management Under IFRS: The Case of Deposit Money Banks in Nigeria. Am J Manag Sci Eng. 2017;2(4):58-64. doi: 10.11648/j.ajmse.20170204.12

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@article{10.11648/j.ajmse.20170204.12,
  author = {Clement Chiahemba Ajekwe and Adzor Ibiamke and Marie Fagson Silas},
  title = {Loan Loss Provisions, Earnings Smoothing and Capital Management Under IFRS: The Case of Deposit Money Banks in Nigeria},
  journal = {American Journal of Management Science and Engineering},
  volume = {2},
  number = {4},
  pages = {58-64},
  doi = {10.11648/j.ajmse.20170204.12},
  url = {https://doi.org/10.11648/j.ajmse.20170204.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ajmse.20170204.12},
  abstract = {The paper examines the impact of IFRS adoption on the use of loan loss provisions (LLPs) to manage earnings and capital by listed deposit money banks in Nigeria. The study employed an ex-post facto research design and a sample of fourteen (14) Deposit Money Banks listed on the Nigerian Stock Exchange. Data was obtained from 2009 to 2014 to capture the pre- and post- IFRS adoption periods. Using paired sample t-test, we find quantitative evidence to the effect that there are significant increase in the means of loan loss provisioning, and capital management by Deposit Money Banks in Nigeria in the post IFRS adoption period compared to the pre-IFRS adoption period. However, the levels of earnings smoothing are significantly lower in the post IFRS period. The implication of this finding is that adoption of IFRS improved earnings quality in the sense of reduced earnings smoothing.},
 year = {2017}
}

Copy | Download

TY  - JOUR
T1  - Loan Loss Provisions, Earnings Smoothing and Capital Management Under IFRS: The Case of Deposit Money Banks in Nigeria
AU  - Clement Chiahemba Ajekwe
AU  - Adzor Ibiamke
AU  - Marie Fagson Silas
Y1  - 2017/08/15
PY  - 2017
N1  - https://doi.org/10.11648/j.ajmse.20170204.12
DO  - 10.11648/j.ajmse.20170204.12
T2  - American Journal of Management Science and Engineering
JF  - American Journal of Management Science and Engineering
JO  - American Journal of Management Science and Engineering
SP  - 58
EP  - 64
PB  - Science Publishing Group
SN  - 2575-1379
UR  - https://doi.org/10.11648/j.ajmse.20170204.12
AB  - The paper examines the impact of IFRS adoption on the use of loan loss provisions (LLPs) to manage earnings and capital by listed deposit money banks in Nigeria. The study employed an ex-post facto research design and a sample of fourteen (14) Deposit Money Banks listed on the Nigerian Stock Exchange. Data was obtained from 2009 to 2014 to capture the pre- and post- IFRS adoption periods. Using paired sample t-test, we find quantitative evidence to the effect that there are significant increase in the means of loan loss provisioning, and capital management by Deposit Money Banks in Nigeria in the post IFRS adoption period compared to the pre-IFRS adoption period. However, the levels of earnings smoothing are significantly lower in the post IFRS period. The implication of this finding is that adoption of IFRS improved earnings quality in the sense of reduced earnings smoothing.
VL  - 2
IS  - 4
ER  -

Copy | Download