The dividend policy of state-owned banks during an economic crisis

Dusan Isakov, Allister Keane () and Alain Schatt

No 541, FSES Working Papers from Faculty of Economics and Social Sciences, University of Freiburg/Fribourg Switzerland

Abstract: This study examines the dividend policy of Swiss state-owned banks during the recent economic crisis caused by the COVID-19 pandemic. Our empirical analysis shows that these banks had higher pre-crisis dividend payouts than other Swiss banks. While other banks reduced dividend payouts during the crisis, state-owned banks maintained higher dividend levels and consistent payout ratios throughout the economic downturn. Thus, the gap between state-owned banks and other banks increased from 18% before the crisis to 24% during the crisis. Moreover, we document that these higher payouts are not due to higher profitability of state-owned banks. Finally, we find no significant differences in dividend yields except when comparing public and private state-owned banks. Overall, this study provides evidence of the significant influence of dominant state shareholders on banks› financial policies in times of economic crisis.

Keywords: State-owned banks; economic crisis; payout ratio; dividend yield; Switzerland (search for similar items in EconPapers)
JEL-codes: G21 G35 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2025-05-01
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