Description:
Using a sample of 166 banks from 8 European countries over the period 2001-2017, we investigate the moderating effects of societal patriarchy over bank income smoothing (IS), amid policy uncertainty (PU). Results indicate that banks operating in highly patriarchal societies curtail use of loan loss provisions (LLP) to smooth their income in the wake of policy uncertainty. This effect of patriarchy is attenuated in a low uncertainty environment, while the relationship is altered during financial crisis as the income smoothing increases amid heightened uncertainty. Moreover, better governance framework tends to limit the income smoothing behaviour in banks, highlighting the significance of robust monitoring and governance. Our results survive the Placebo test and GMM analysis, hence remain robust to the concerns of endogeneity and reverse causality