Abstract:
This study examines the effect of loan loss provision on revenue recognition of listed deposit money banks (DMBs) in Nigeria. Secondary sources of data were used from the annual reports, and financial statement of the twelve (12) deposit money banks selected for the period between 2014 and 2018. The methodology employed was panel data analysis including pooled Ordinary least square estimation with fixed effect estimation. The variables studied were Revenue Recognition (RR), Loan Loss Provision (LLR), Income Smoothening (IS) and Value Relevance (VR). The results revealed that income smoothening, Loan Loss Provision and Value Relevance impacted negatively on revenue recognition; however, only the effect of LLP is found to be statistically significant in pre- IFRS adoption while loan loss provision and value relevance impacted positively on revenue recognition and income smoothening impacted negatively on revenue recognition in post- IFRS adoption respectively. However, loan loss provision and value relevance have significant impact on revenue recognition in post IFRS adoption. The study therefore concluded that, the adoption of international financial reporting standard has had significant effects on the mechanics of loan loss provisioning in Nigerian Deposit Money Banks. It is therefore recommended that management should congruence the loan loss provision because it has a critical effect on revenue recognition which will have an inevitable effect on profitability and sustainability.
