TARP’s Deadbeat Banks
University of Louisiana at Lafayette - College of Business Administration
September 18, 2012
Review of Quantitative Finance and Accounting, Forthcoming
This paper tests whether poorly capitalized banks with troubled loan books are more likely to miss their bailout dividends. Privately held banks with weaker core capital ratios, more charged off loans, more allowances for loan losses, and more non-performing loans are more likely to miss their Troubled Asset Relief Program (TARP) dividends. Banks that issue non-cumulative preferred stock are also more likely to be TARP deadbeats. In addition, banks that missed a bailout dividend in the prior quarter are significantly more likely to miss the next bailout dividend.
Number of Pages in PDF File: 50
Keywords: bailout, banking, debt overhang, Capital Purchase Program, Emergency Economic Stabilization Act, lending, preferred stock, subordinated debt, TARP
JEL Classification: G21, G28, G38
Date posted: December 26, 2009 ; Last revised: September 19, 2012
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