Moral hazard, dividends, and risk in banks

Onali, E. (2014) Moral hazard, dividends, and risk in banks. Journal of Business Finance & Accounting, 41 ((1-2)). DOI: 10.1111/jbfa.12057

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In non-financial firms, higher risk taking results in lower dividend payout ratios. In banking, public guarantees may result in a positive relationship between dividend payout ratios and risk taking. I investigate the interplay between dividend payout ratios and bank risk-taking allowing for the effect of charter values and capital adequacy regulation. I find a positive relationship between bank risk-taking and dividend payout ratios. Proximity to the required capital ratio and a high charter value reduce the impact of bank risk-taking on the dividend payout ratio. My results are robust to different proxies for the dividend payout ratio and bank risk-taking.

Item Type: Article
Subjects: Research Publications
Departments: College of Business, Law, Education and Social Sciences > Bangor Business School
Date Deposited: 13 Dec 2014 03:47
Last Modified: 23 Sep 2015 03:00
ISSN: 0306-686X
URI: http://e.bangor.ac.uk/id/eprint/3284
Identification Number: DOI: 10.1111/jbfa.12057
Publisher: John Wiley & Sons
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