Banking sector earnings management using loan loss provisions in the Fintech era

This paper analyse banking sector earnings management using loan loss provisions in the Fintech era. The findings show evidence for bank income smoothing using loan loss provisions. There is greater income smoothing in the second-wave Fintech era compared to the first-wave Fintech era, and the presence of strong institutions did not lower income smoothing in the second wave era. Bank income smoothing is also greater in (i) BIS and EU countries than in non-EU countries and G7 countries, (ii) well-capitalised banking sectors, and (iii) during economic booms, in the second wave Fintech era. The implication is that the competition for loans and deposits by banks and Fintech lenders in the second-wave Fintech era created additional incentives for banks to engage in income smoothing to report competitive and stable earning