Have European Banks Maintained Their Payout Policy during the Crisis? the Role of Scrip Dividends

International Journal of Finance & Economics 27 (4), 4619-4632,. Forthcoming

27 Pages Posted: 14 Feb 2023

See all articles by David Blanco

David Blanco

University of Burgos - Department of Economics

Jorge Gallud Cano

University of Valladolid - Department of Finance and Accounting

Félix J. López-Iturriaga

Universidad de Valladolid - Department of Finance and Accounting

Óscar López-de-Foronda

University of Burgos - Department of Economics

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Date Written: February 11, 2023

Abstract

We analyse the trend among 79 banks from 20 European countries towards scrip dividends. Whereas banks do not seem to smooth cash dividends, they do smooth total dividends, which include both cash and scrip dividends. We also find that the new legal requirements (resulting from the Basel Accords and other country-level laws) have different implications on cash and scrip dividends. Whereas the need for better and more capital imposed by these rules has led banks to cut cash dividends, there is a positive relationship between the legal requirements on capital adequacy and scrip dividends.

Keywords: Dividends; Scrip Dividends; Capital Stringency; Payout; Shareholder Protection; European Banks, Basel Agreements

JEL Classification: G21; G35

Suggested Citation

Blanco, David and Gallud Cano, Jorge and Lopez-Iturriaga, Felix Javier and Lopez de Foronda, Oscar, Have European Banks Maintained Their Payout Policy during the Crisis? the Role of Scrip Dividends (February 11, 2023). International Journal of Finance & Economics 27 (4), 4619-4632,. Forthcoming, Available at SSRN: https://ssrn.com/abstract=4354713 or http://dx.doi.org/10.2139/ssrn.4354713

David Blanco

University of Burgos - Department of Economics ( email )

Jorge Gallud Cano

University of Valladolid - Department of Finance and Accounting ( email )

Avda. Valle Esgueva 6
47011 Valladolid
Spain

Felix Javier Lopez-Iturriaga (Contact Author)

Universidad de Valladolid - Department of Finance and Accounting ( email )

Avda. Valle Esgueva 6
47011 Valladolid
Spain
+34 983 184 395 (Phone)
+34 983 183830 (Fax)

Oscar Lopez de Foronda

University of Burgos - Department of Economics ( email )

Plaza Infanta Elena
E09001 Burgos
Spain

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