Understanding Bank Payouts During the Crisis of 2007-2009

Understanding Bank Payouts During the Crisis of 2007-2009

Peter Cziraki, Christian Laux, Gyongyi Loranth

Series number :

Serial Number: 
480/2016

Date posted :

July 09 2019

Last revised :

February 22 2021
SSRN Share

Keywords

  • dividends • 
  • total payout • 
  • financial crisis • 
  • insider trading

We study U.S. banks’ payout policy in 2007-2008. We benchmark these payouts against payouts before the crisis, measure stock price reactions to announcements of dividend changes, and analyze changes in the relation between payout growth and future performance.

Further, we examine cross-sectional variation in banks’ payout policy to gauge the possible motives underlying banks’ payout decisions in 2007-2008. We do not find that banks that have a higher willingness to take risk or that have higher incentives to undertake asset substitution use their payout policy to engage in more wealth transfer compared to other banks.

Authors

Real name:
Peter Cziraki
Real name:
Gyongyi Loranth