Details
| Original language | English |
|---|---|
| Pages (from-to) | S25-S31 |
| Journal | European Journal of Political Economy |
| Volume | 34 |
| Early online date | 13 Sept 2013 |
| Publication status | Published - Jun 2014 |
Abstract
The global financial crisis has caused controversial discussions about the capital base of the banking industry in Europe. Dividend cuts and omissions have been suggested as one possibility to improve the financial strength of banks by retaining earnings. However, there are fears that investors could interpret a reduction of dividends as a sign for future problems. The dividend signalling and dividend smoothing hypotheses quite clearly are the theoretical basis for these worries. The basic idea of this study is that without empirical evidence supporting the hypothesis dividends did matter in the past, banks should not fear dividend cuts or even dividend omissions. The empirical evidence from the European banking industry reported here does not indicate that dividend signalling and dividend smoothing are relevant economic phenomena.
Keywords
- Bank capital base, Cointegration analysis, Dividend policy, Dividend signalling, Financial crisis, Regulation
ASJC Scopus subject areas
- Economics, Econometrics and Finance(all)
- Economics and Econometrics
- Social Sciences(all)
- Political Science and International Relations
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In: European Journal of Political Economy, Vol. 34, 06.2014, p. S25-S31.
Research output: Contribution to journal › Article › Research › peer review
}
TY - JOUR
T1 - Bank dividend policy and the global financial crisis
T2 - Empirical evidence from Europe
AU - Basse, Tobias
AU - Reddemann, Sebastian
AU - Riegler, Johannes Jörg
AU - von der Schulenburg, J. Matthias Graf
PY - 2014/6
Y1 - 2014/6
N2 - The global financial crisis has caused controversial discussions about the capital base of the banking industry in Europe. Dividend cuts and omissions have been suggested as one possibility to improve the financial strength of banks by retaining earnings. However, there are fears that investors could interpret a reduction of dividends as a sign for future problems. The dividend signalling and dividend smoothing hypotheses quite clearly are the theoretical basis for these worries. The basic idea of this study is that without empirical evidence supporting the hypothesis dividends did matter in the past, banks should not fear dividend cuts or even dividend omissions. The empirical evidence from the European banking industry reported here does not indicate that dividend signalling and dividend smoothing are relevant economic phenomena.
AB - The global financial crisis has caused controversial discussions about the capital base of the banking industry in Europe. Dividend cuts and omissions have been suggested as one possibility to improve the financial strength of banks by retaining earnings. However, there are fears that investors could interpret a reduction of dividends as a sign for future problems. The dividend signalling and dividend smoothing hypotheses quite clearly are the theoretical basis for these worries. The basic idea of this study is that without empirical evidence supporting the hypothesis dividends did matter in the past, banks should not fear dividend cuts or even dividend omissions. The empirical evidence from the European banking industry reported here does not indicate that dividend signalling and dividend smoothing are relevant economic phenomena.
KW - Bank capital base
KW - Cointegration analysis
KW - Dividend policy
KW - Dividend signalling
KW - Financial crisis
KW - Regulation
UR - http://www.scopus.com/inward/record.url?scp=84904194520&partnerID=8YFLogxK
U2 - 10.1016/j.ejpoleco.2013.09.001
DO - 10.1016/j.ejpoleco.2013.09.001
M3 - Article
AN - SCOPUS:84904194520
VL - 34
SP - S25-S31
JO - European Journal of Political Economy
JF - European Journal of Political Economy
SN - 0176-2680
ER -