Revisiting earnings quality and bank efficiency among East African developing economies: do systemic banking and financial crises matter?

What is it about?

Banks with higher profit efficiency consistently report higher quality earnings. We further establish that whereas systemic local banking crises (LBCs) contribute negatively to bank earnings quality, the GFC tends to have a positive impact. These results are upheld when the joint impacts of both systemic LBCs, GFC and profit efficiency on earnings quality are considered. The positive influence of profit efficiency and GFC on earnings quality is pronounced under income-decreasing earnings management. The impacts of profit efficiency, LBCs and GFC on earnings quality are non-monotonic and vary across the sampled countries.

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