STUART THEOBALD: Banks go back to the future as discretion makes a comeback
Once upon a time, banks could make up their earnings. Well, not quite, but bankers had a lot of discretion. With banks’ earnings season now upon us, it is tempting to reminisce. For various reasons, discretion has made something of a comeback.
There are many studies that show banks engaged in earnings smoothing. This was the practice of managing just when a bank would recognise losses or gains to keep earnings and dividends growing steadily year after year. That was thought (and probably did) build confidence among shareholders and depositors alike. ..
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