The determinants that affect the success of Loan loss provisioning: Analysing the UK banking industry.

Although there is an abundance of literature that discusses the loan loss provisioning theory in great detail. This paper wants to utilize the findings from contemporary literature and integrate that research, to investigate the effects on the UK banking industry. The paper uses analytical econometric models to examine the cost efficiency of UK banks, and assess how loan loss provisioning is determined by employing selected variables. The results illustrate there are diseconomies of scale, and only one out of three hypotheses are proven to be true. Policy recommendations flow from the findings. Its objective is to explain the imperative nature of fixing the adverse effects of pro-cyclicality and refining diseconomies of scale for the industry, thus advocating the need to be more efficient