Competition and bank dividends

Dimitris K. Chronopoulos, Edie Erman Che Johari, Bert Scholtens, Anna L. Sobiech, John Wilson and Muhammed H. Yilmaz

Journal of International Money and Finance, 2023, vol. 137, issue C

Abstract: We investigate the impact of state level competition on bank dividends following the passage of the US Interstate Banking and Branching Efficiency Act (IBBEA). Using a sample of top-tier US bank holding companies, we find that in states where extensive deregulation leads to intensified competition, banks pay fewer dividends relative to counterparts operating in states where deregulation took place more slowly. These findings are stronger for banks with lower expected future earnings, suggesting that competition reduces the ability of lower performing banks to continue paying dividends. We also find that banks operating in states characterised by higher competition and less supervisory oversight pay higher dividends than counterparts operating in similarly competitive states with stricter supervision.

Keywords: Banking; Competition; Deregulation; Dividends; Supervision (search for similar items in EconPapers)
JEL-codes: G21 G35 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:137:y:2023:i:c:s0261560623000992

DOI: 10.1016/j.jimonfin.2023.102898

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