Bank Dividend Policy and the European Debt Crisis: Is Sovereign Credit Risk of Relevance?

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Authors

This chapter examines the dividend policy of European banks. The empirical evidence presented here suggests that financial institutions in the Eurozone react to stress in international financial markets by reducing or omitting dividend payouts to strengthen their capital position. Additionally, a negative reaction of dividend payouts of European banks to an increase of the yield differential between German and Spanish bonds seems to exist. However, this response of dividends to sovereign credit risk in the Eurozone is not statistically significant. The financial crisis starting in 2007 does not seem to materially change the relationships among the variables examined here.

Original languageEnglish
Title of host publicationHandbook of Global Financial Markets : Transformations, Dependence, and Risk Spillovers
EditorsSabri Boubaker, Duc Khuong Nguyen
Number of pages10
PublisherWorld Scientific Publishing Co.
Publication date07.2019
Pages401-410
ISBN (Print)978-981-3236-64-6 , 978-981-3236-66-0
ISBN (Electronic)978-981-3236-65-3
DOIs
Publication statusPublished - 07.2019
Externally publishedYes