Moral Hazard, dividends, and risk in banks

• Autores: Enrico Onali
• Localización: Journal of Business Finance & Accounting, ISSN-e 1468-5957, Vol. 41, Nº. 1 (issue 1-2), 2014, págs. 128-155
• Idioma: inglés
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• Resumen

  • 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.