The purpose of this study is to demystify the most crucial accruals in the banking industry, i.e., loan loss provisions (LLP). This study seeks to systematically review, integrate and synthesize the extensive body of literature on LLP. Furthermore, this study aims to identify the topical debates and their theoretical underpinnings, emerging themes and avenues for potential research in this field.
This study utilizes the Scientific Procedures and Rationales for Systematic Literature Reviews (SPAR-4-SLR) protocol to identify, organize and evaluate 120 studies over a 35-year period (spanning 1988–2023) from the Scopus database. This study uses VOSviewer and RStudio for performance analysis and science mapping.
This study documents the prominent authors, journals, countries and methodologies used in empirical research based on performance analysis. Moreover, science mapping reveals six themes that collectively summarize the existing body of knowledge. The findings indicate an increased scholarly interest in LLP over the 35-year period; however, the extant literature largely focuses on exploring the opportunistic use of LLP. Lastly, it proposes future research avenues and provides pertinent insights to researchers.
This is the first SLR in the LLP field, using the most advanced and scientific approach, i.e., SPAR-4-SLR, to present an updated and comprehensive overview of various strands and research hotspots in the domain. Next, it offers a novel contribution by developing an integrated framework that combines the key factors, moderators and consequences of LLP literature. Finally, it outlines emerging research areas, namely, environmental, social, governance (ESG), corporate social responsibility (CSR), International Financial Reporting Standards 9/current expected credit loss model and fintech, that have remained less well explored in the previous research.
