A literiture review on earning smoothing in banking industry

Abstract

This paper provides a literature review on earnings smoothing in banking industry. It discusses on concept of earning
smoothing and introduces the model developed by Leuz et al. (2003) which is widely used to evaluate this activity.
Previous researches in banking industry, however, have rarely used this model. They focus mainly on earning smoothing
through loan loss provion. But the results of these researches are conflicting, expecially for Asian countries. The paper
also provides some directions for future research. Firsly, a review of the measures applied for loan loss provision and
earnings before tax and provision can shed a new light in the earnings smoothing of Vietnamese banks. And modifying
the model developed by Leuz et al. (2003) to apply for banking sector can help us achieve a deeper understanding of
earning smoothing activities