IDEAS home Printed from
   My bibliography  Save this paper

Dividend Policy of European Banks



The majority of managers set themselves some long-term coefficient-objective for the distribution of dividends in relation to the profits of the period (target payout ratio). But they do not mechanically apply this ratio to each year?s profits as they try to avoid brusque fluctuations which could provoke movements in investors? positions in imperfect markets. The purpose of this paper is to verify whether the dividend distribution policy of a company depends not only on profit but also on other factors, amongst which the both the theoretical and empirical literature point to the following: the profitability of the company, the stability of its earnings, its rate of growth and opportunities for investment and its financial and governing structure, highlighting the institutional aspects of the financial systems of the countries in which banks operate. The results obtained in the empirical test allow us to affirm that the policy of payouts does not depend solely on business profits. We observe that the economic and financial factors proposed by the theories mentioned, along with institutional factors, in practice determine the dividends of companies according to the structure of government which exists within organisations.

Suggested Citation

  • D¡ez Esteban, Jos‚ Mar¡a & L¢pez de Foronda P‚rez, àscar, 2001. "Dividend Policy of European Banks," Working Papers "New Trends on Business Administration". Documentos de Trabajo "Nuevas Tendencias en Dirección de Empresas". 2001-03, Interuniversity Research Master and Doctorate Program (with a quality mention of ANECA) on "Business Economics", Universities of Valladolid, Burgos, Salamanca and León (Spain). Until 2008, Interuniversity Doctorate Program (with a quality mention of ANECA) “New trends in Business Administration”, Universities of Valladolid, Burgos, and Salamanca (Spain). Master en Investigación y Programa de Docto.
  • Handle: RePEc:ntd:wpaper:2001-03

    Download full text from publisher

    File URL:
    Download Restriction: no

    More about this item


    Banks; dividends; panel data.;


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ntd:wpaper:2001-03. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Fortuna-Lindo, Jose M.). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.