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The Interplay between Dividends and Leverage inside Commercial Banks

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  • Silvia Bressan

Abstract

The paper analyzes the dividends paid by a large sample of commercial banks in the United States during 2006-2011. The most interesting findings arise after the end of 2008. Our measures for the probability of paying dividends and for the dividend payout ratio are positively related to the banks¡ä non-deposit leverage. Conversely, banks¡ä dividends correlate negatively to deposit leverage. We argue that during the crisis of 2007-2009 the liquidity needs of banks resorted more to deposits, than to non-deposit debt. This, in turn, had an impact on banks¡ä dividend policies, to the extent that firms which could raise deposits preferred to preserve their financial stability, and did not pay huge dividends.

Suggested Citation

  • Silvia Bressan, 2017. "The Interplay between Dividends and Leverage inside Commercial Banks," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 8(2), pages 7-39, April.
    • Handle: RePEc:jfr:ijfr11:v:8:y:2017:i:2:p:7-39
    DOI: 10.5430/ijfr.v8n2p7
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    Keywords

    banks; dividends; leverage;
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