Why European Banks Adjust their Dividend Payouts?

Marco Belloni, Maciej Grodzicki and Mariusz Jarmuzek

No 2022/194, IMF Working Papers from International Monetary Fund

Abstract: Using a panel data approach for two samples of listed and unlisted European banks, this paper provides evidence that, over a decade and a half preceding the pandemic, bank dividend payouts were adjusted in line with the motivations found in the literature. Banks change their dividend payouts because they would like to signal good profitability to shareholders to address information asymmetry, or use dividends to mitigate the agency costs, or could come under pressure from prudential supervisors and regulators to retain earnings. Banks are found not to discount expectations about future economic conditions or their own profitability when making payouts. Simulations show that, in the absence of supervisory sector-wide recommendations to suspend dividend payouts, banks would likely have reduced the payouts only slightly in the first year of the pandemic.

Keywords: Bank dividend policy; banking regulation and supervision; panel data analysis.; bank dividend payout; bank profitability ratio; dividend payout; bank capital ratios; Capital adequacy requirements; Bank soundness; Global financial crisis of 2008-2009; Countercyclical capital buffers; Global (search for similar items in EconPapers)
Pages: 33
Date: 2022-09-23
New Economics Papers: this item is included in nep-cba and nep-fdg
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=522761 (application/pdf)

Related works:
Journal Article: Why European banks adjust their dividend payouts? (2024)
Working Paper: Why European banks adjust their dividend payouts? (2023)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:2022/194

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().