Bank Payout Policy, Regulation, and Politics

Ruediger Fahlenbrach, Minsu Ko and René M. Stulz

No 32770, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: G21 G28 G35 (search for similar items in EconPapers)
Date: 2024-08
New Economics Papers: this item is included in nep-cba, nep-mon and nep-reg
Note: CF
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Working Paper: Bank Payout Policy, Regulation, and Politics (2024)
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