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March 18, 2026

Latin American Lending by Major U.S. Banks: The Effects of Disclosures about Nonaccrual Loans and Loan Loss Provisions.

Key Points

This research investigates the impact of disclosures about nonaccrual loans and loan loss provisions on stockholders' returns of U.S. banks.
Analysis of stockholder returns of 13 major American banks
Examination of disclosures made in 1987 regarding Brazilian loans
Assessment of changes in loan loss reserves due to default risks
Increased loan loss provisions correlated with stockholders' returns
Nonaccrual classification of loans affected market perceptions
Disclosures had significant financial implications for banks' valuations

Abstract

Abstract Examines how stockholders' returns of 13 of the largest American money-center and regional banks were affected by disclosures made during 1987 regarding decisions to place Brazilian loans on a nonaccrual basis and to increase loan loss reserves to recognize the higher probability of default and the lower present value of future interest and principal.

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Cite This Study

Griffin et al. (Tue,) studied this question.

synapsesocial.com/papers/69ba44084e9516ffd37a5daa https://doi.org/https://doi.org/10.2308/tar-9605070409

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