【报告主题】Risk-Taking in Lending:The Interplay of Loan Loss Provision Models and Loan Officers’Incentives
【主讲嘉宾】徐图，中国人民大学商学院会计系副教授
【报告时间】2024年6月25日 13:00
【报告地点】会计学院108室
【内容提要】
We study how the loan loss provision model and loan officers’ incentive contracts jointly shape lending riskiness. The global shift from the incurred losses (IL) model to the expected credit losses (ECL) model is one of the most significant changes in accounting policies related to bank loans and has been hotly debated. Behavioral economics research on the realization effect suggests that decision-makers are more risk-seeking when faced with an unrealized loss than when faced with no unrealized loss or a realized loss. Consistent with this theory, our experiment conducted at large banks finds that as opposed to IL, ECL causes commercial bank loan officers to be more risk seeking when approving new loan applications. We further examine how varying compensation schemes may influence the lending decision by manipulating incentive contracts. We find that linking loan officers’ incentives to expected loss provision, as opposed to the actual default, lessens the impact of ECL on risk-taking. Our study enriches the nascent literature on the effects of ECL and informs the ongoing debate regarding the relationship between ECL and banks’ risk-taking.