{
  "title": "Why European Banks Adjust their Dividend Payouts?",
  "publication": "IMF Working Papers, September 23, 2022",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2022/09/23/why-european-banks-adjust-their-dividend-payouts-522761",
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  "summary": "Using a panel data approach for two samples of listed and unlisted European banks, this paper provides evidence that, over a decade and a half preceding the pandemic, bank dividend payouts were adjusted in line with the motivations found in the literature.",
  "sections": [
    {
      "heading": "Core findings",
      "content": "- Using a panel data approach for two samples of listed and unlisted European banks, the paper provides evidence that, over a decade and a half preceding the pandemic, bank dividend payouts were adjusted in line with the motivations found in the literature.\n- Banks change their dividend payouts because they:\n  - would like to signal good profitability to shareholders to address information asymmetry,\n  - use dividends to mitigate the agency costs, or\n  - could come under pressure from prudential supervisors and regulators to retain earnings.\n- Banks are found not to discount expectations about future economic conditions or their own profitability when making payouts.\n- Simulations show that, in the absence of supervisory sector-wide recommendations to suspend dividend payouts, banks would likely have reduced the payouts only slightly in the first year of the pandemic."
    },
    {
      "heading": "Methodology",
      "content": "- Empirical approach: panel data analysis applied to two samples (listed and unlisted European banks).\n- Time coverage: \"a decade and a half preceding the pandemic\" (phrase preserved as in source)."
    },
    {
      "heading": "Policy-relevant implications",
      "content": "- Dividend policy reflects signaling motives, agency-cost mitigation, and regulatory/supervisory pressure to retain earnings.\n- Supervisory sector-wide recommendations to suspend dividend payouts materially affected actual payout behavior during the pandemic; without such recommendations, the simulated reduction in payouts in the first pandemic year would likely have been small.\n- Findings suggest supervisors can influence bank payout behavior through sector-wide guidance, while banks do not appear to proactively adjust payouts based on forecasts of future economic conditions or profitability."
    },
    {
      "heading": "Key statistics and publication metadata",
      "content": "- Authors: Marco Belloni, Maciej Grodzicki, Mariusz Jarmuzek\n- Date: September 23, 2022\n- Series: Working Paper No. 2022/194\n- Volume: 2022\n- Issue: 194\n- Pages: 33\n- DOI: https://doi.org/10.5089/9798400218972.001\n- ISBN: 9798400218972\n- ISSN: 1018-5941\n\nSummary derived from IMF Working Papers entry \"Why European Banks Adjust their Dividend Payouts?\"\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2022/09/23/why-european-banks-adjust-their-dividend-payouts-522761"
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    "Authors: Marco Belloni, Maciej Grodzicki, Mariusz Jarmuzek",
    "Published: September 23, 2022",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9798400218972.001",
    "Using a panel data approach for two samples of listed and unlisted European banks, the paper provides evidence that, over a decade and a half preceding the pandemic, bank dividend payouts were adjusted in line with the motivations found in the literature.",
    "Banks change their dividend payouts because they:",
    "Banks are found not to discount expectations about future economic conditions or their own profitability when making payouts.",
    "Simulations show that, in the absence of supervisory sector-wide recommendations to suspend dividend payouts, banks would likely have reduced the payouts only slightly in the first year of the pandemic.",
    "Empirical approach: panel data analysis applied to two samples (listed and unlisted European banks).",
    "Time coverage: \"a decade and a half preceding the pandemic\" (phrase preserved as in source).",
    "Dividend policy reflects signaling motives, agency-cost mitigation, and regulatory/supervisory pressure to retain earnings.",
    "Supervisory sector-wide recommendations to suspend dividend payouts materially affected actual payout behavior during the pandemic; without such recommendations, the simulated reduction in payouts in the first pandemic year would likely have been small.",
    "Findings suggest supervisors can influence bank payout behavior through sector-wide guidance, while banks do not appear to proactively adjust payouts based on forecasts of future economic conditions or profitability.",
    "Authors: Marco Belloni, Maciej Grodzicki, Mariusz Jarmuzek",
    "Date: September 23, 2022",
    "Series: Working Paper No. 2022/194",
    "Volume: 2022",
    "Issue: 194",
    "Pages: 33",
    "DOI: https://doi.org/10.5089/9798400218972.001",
    "ISBN: 9798400218972",
    "ISSN: 1018-5941",
    "**Working Paper**"
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