The Impact of Financial Crisis on Bank Revenue Management


This paper examines bank management of revenue through loan loss provisions (LLPs) during the period of 2003-2013. The sample period includes the financial crisis of 2008-2009, during which banks experienced revenue slowdowns owing to plunging mortgage lending activity. We examine whether LLPs are significantly different between the pre- and post-crisis periods. Our findings indicate that LLPs are not lower after the crisis; that is, banks are not using LLPs to manage earnings upward and smooth earnings in the post-crisis period. We also examine the effect of regulatory intervention on LLPs, measuring regulatory intervention using three variables: capital ratio, liquidity of assets, and bank size. Our findings indicate that banks that are less likely to face regulatory intervention are more likely to use LLPs to manage earnings upward and to smooth earnings in the post-crisis period.


Business and Information Technology

Keywords and Phrases

Bank revenue management; Bank size; Capital ratio; Earnings smoothing; Financial crisis; Liquidity; LLPs; Loan loss provisions; Regulatory intervention

International Standard Serial Number (ISSN)

1474-7332; 1741-8186

Document Type

Article - Journal

Document Version


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Publication Date

01 Sep 2016