Bank payout policy, regulation, and politics

Rüdiger Fahlenbrach, Minsu Ko and René M. Stulz
Additional contact information
Rüdiger Fahlenbrach: École Polytechnique Fédérale de Lausanne (EPFL); Swiss Finance Institute; European Corporate Governance Institute (ECGI)
Minsu Ko: Monash University
René M. Stulz: Ohio State University (OSU) - Department of Finance; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

No 24-86, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: Bank payout policy is strongly affected by regulation and politics, especially for the largest banks. Banks, but not industrial firms, have consistently lower payouts in times of high regulation uncertainty and under democratic presidents. After the Global Financial Crisis, bank regulators' influence on payout policies of the largest banks increases sharply and repurchases become more important than dividends for these banks. Repurchases respond more to regulatory climate changes than dividends. The stock-price reaction of the largest banks to the election of Donald Trump is larger than for small banks or industrial firms, and their repurchases increase sharply afterwards.

Keywords: Financial institutions; payout policy; dividends; repurchases; regulation; political influence (search for similar items in EconPapers)
JEL-codes: G21 G28 G35 (search for similar items in EconPapers)
Pages: 61 pages
Date: 2024-07
New Economics Papers: this item is included in nep-pol and nep-reg
References: Add references at CitEc
Citations:

Downloads: (external link)
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4904415 (application/pdf)

Related works:
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:chf:rpseri:rp2486

Access Statistics for this paper

More papers in Swiss Finance Institute Research Paper Series from Swiss Finance Institute Contact information at EDIRC.
Bibliographic data for series maintained by Ridima Mittal ().