Abstract (EN)

This paper examines the determinants of loan loss provisioning by multilateral development banks (MDBs). These entities provide financing for developing countries by raising funds on the capital markets. The objective of the paper is to explain the motivation of MDBs’ management in the choice of their financial reporting methods in the context of IFRS standards (signaling, income smoothing, capital management). The empirical survey is based on a sample of 21 MDBs, including the largest and more visible institutions Data were obtained from the Bankscope database and from data published in banks’ annual reports. The methodology is based on a linear regression using panel data with fixed effects on the 2013-2017 period. We conclude that the stock of provisions (or loan loss reserves) is significantly related to the level of impaired loans, but also to the credit rating assigned to the bank. MDBs with low ratings tend to constitute large loan loss reserves, which can be explained by the willingness of management to signal the conservatism of its financial reporting to the bond market.