expected losses, as reflected in loan loss allowances, we establish a theoretical link to asset volatility. We document a … sensitivity regarding loan loss allowances has been insufficient, at least since the financial crisis …

reporting fewer provisions or lower loan losses motivate credit risk teams to game the system that work to determine loan loss … games, they do not care if their behaviour destroys bank value and the informativeness of loan loss provisioning estimates … provisioning discretion of credit risk teams but rather to de-link credit risk teams' bonuses from the magnitude of loan loss …