Bank dividend restrictions and banks' institutional investors

Christian Mücke

No 392, SAFE Working Paper Series from Leibniz Institute for Financial Research SAFE

Abstract: This paper studies the impact of banks' dividend restrictions on the behavior of their institutional investors. Using an identification strategy that relies on the within investor variation and a difference in difference setup, I find that funds permanently decrease their ownership shares at treated banks during the 2020 dividend restrictions in the Eurozone and even exit treated banks' stocks. Using data before the introduction of the ban reveals a positive relationship between fund ownership and banks' dividend yield, highlighting again the importance of dividends for European banks' fund investors. This reaction also has pricing implications since there is a negative relationship between the dividend restriction announcement day cumulative abnormal returns and the percentage of fund owners per bank.

Keywords: Dividend Policy; Mutual Funds; Institutional Investors' Ownership; Banking Supervision; COVID-19 Pandemic (search for similar items in EconPapers)
JEL-codes: G12 G21 G23 G28 G35 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-ban, nep-cfn and nep-eec
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:safewp:392

DOI: 10.2139/ssrn.4498119

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