Bank stability and dividend policy

Dung Viet Tran

Relying on a US bank sample, we document the double-edged sword of dividends on the bank's riskiness. Paying dividends exposes banks to stricter market discipline, then decreases the risk-taking behaviors of bank management compared with non-payers, consistent with the Dividend-Stability Channel. However, among banks that pay dividends, excessive dividends makes them riskier, consistent with the Dividend-Fragility Channel. Our results remain unchanged due to a battery of robustness testings.

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Year of publication:	2021
Authors:	Tran, Dung Viet
Published in:	Cogent economics & finance. - Abingdon : Taylor & Francis, ISSN 2332-2039, ZDB-ID 2773198-4. - Vol. 9.2021, 1, Art.-No. 1982234, p. 1-21
Subject:	banks \| dividends \| payout policy \| risk \| Dividende \| Dividend \| Bank \| Ausschüttungspolitik \| Payout policy \| Bankenkrise \| Banking crisis \| Bankenregulierung \| Bank regulation