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Aspects of Payout Policy of German Savings Banks

Author

Listed:
  • Volker Kleff

    (Researcher, Ludwigstraße 12b, D-61348 Bad Homburg)

  • Martin Weber

    (Universität Mannheim, Lehrstuhl für ABWL, Finanzwirtschaft, insb. Bankbetriebslehre, D-68131 Mannheim)

Abstract

The German savings banks’ distribution of profits among their public owners (i. e. municipalities and districts) requires that legal criteria are met ensuring the banks’ adequate funding via retained profits. In line with the legal framework, our analysis of savings banks in four federal states confirms that profitability and portfolio risk are important determinants of the savings banks’ payout decision. Heavily indebted municipalities and districts, however, might have a strong interest in the savings banks’ payouts to mitigate their financial distress. In fact, we find that the payout decision is also influenced by the public owners’ interest.

Suggested Citation

  • Volker Kleff & Martin Weber, 2010. "Aspects of Payout Policy of German Savings Banks," Credit and Capital Markets, Credit and Capital Markets, vol. 43(1), pages 39-63.
  • Handle: RePEc:kuk:journl:v:43:y:2010:i:1:p:39-63
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    More about this item

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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