Eurasian Banks' national culture: effect on loan losses provisions and risk-weighed assets
14th EBES Conference
The main objective of this paper is to compare the amount and weight of “loan losses provisions” and “risk-weighted assets” in the banking industry on Eurasian geography. We apply the dimensions of national culture identified by Hofstede (2009) and data from the World Values Survey Association to draw inferences about their effect on those two items. In additional analysis, we examine whether the findings are also influenced by the type of bank each country in a triple perspective: by ownership structure (e.g., public, own State,…), by type of consumers (e.g., investing, commercial,…) and by IFRS (e.g., versus local standards or US GAAP). We use a sample from the Datastream representing a diversity of countries, with data of listed Banks over 2007-2013 (the financial crisis period) from Europe and Asia. We contribute to the literature in several ways. First, it contributes to help identifying the factors that can be caring to understand the fulfillment of capital adequacy ratios in the banking industry (Tier 1 and Tier 2). Second, our study also shows that differences in national culture can be reflected in the success of Basel or similar accords. Third, it adds to understand the effect of different accounting practices in the enforcement of capital and liquidity ratios.
national culture,credit risk,IFRS,banking