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Bank dividend restrictions and banks' institutional investors

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  • Mücke, Christian

Abstract

This paper studies the impact of banks' dividend restrictions on the behavior of their institutional investors. Using an identification strategy that relies on the within investor variation and a difference in difference setup, I find that funds permanently decrease their ownership shares at treated banks during the 2020 dividend restrictions in the Eurozone and even exit treated banks' stocks. Using data before the introduction of the ban reveals a positive relationship between fund ownership and banks' dividend yield, highlighting again the importance of dividends for European banks' fund investors. This reaction also has pricing implications since there is a negative relationship between the dividend restriction announcement day cumulative abnormal returns and the percentage of fund owners per bank.

Suggested Citation

  • Mücke, Christian, 2023. "Bank dividend restrictions and banks' institutional investors," SAFE Working Paper Series 392, Leibniz Institute for Financial Research SAFE.
    • Handle: RePEc:zbw:safewp:392
    DOI: 10.2139/ssrn.4498119
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    References listed on IDEAS

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    7. Alexandra Matyunina & Steven Ongena, 2022. "Bank capital buffer releases, public guarantee programs, and dividend bans in COVID-19 Europe: an appraisal," European Journal of Law and Economics, Springer, vol. 54(1), pages 127-152, August.
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    Cited by:

    1. Sanders, Emiel & Simoens, Mathieu & Vander Vennet, Rudi, 2024. "Curse and blessing: The effect of the dividend ban on euro area bank valuations and syndicated lending," Journal of Banking & Finance, Elsevier, vol. 163(C).

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    More about this item

    Keywords

    Dividend Policy; Mutual Funds; Institutional Investors' Ownership; Banking Supervision; COVID-19 Pandemic;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy

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