Bank Dividend Restrictions and Banks’ Institutional Investors

69 Pages Posted: 7 Jul 2023 Last revised: 27 Nov 2023

See all articles by Christian Mücke

Christian Mücke

Leibniz Institute for Financial Research SAFE

Date Written: November 20, 2023


This paper analyses the impact of banks’ dividend restrictions on the behavior of banks’ institutional investors. Using an identification strategy that relies on the within-investor variation and a difference in difference setup, I find that mutual funds, in particular high dividend-paying funds, decrease their ownership shares at treated banks during the 2020 payout restrictions in the Eurozone. This decrease is not reversed after the abrogation of the policy. Using data before the introduction of the ban reveals a positive relationship between fund ownership and banks’ dividend yield, highlighting the importance of dividends for European banks’ fund investors. This reaction also has pricing implications as suggested by a negative relationship between payout restriction announcement cumulative abnormal returns and the percentage of fund owners per bank.

Keywords: Dividend Policy, Mutual Funds, Institutional Investors’ Ownership, Banking Supervision, COVID-19 Pandemic

JEL Classification: G12, G21, G23, G28, G35

Suggested Citation

Mücke, Christian, Bank Dividend Restrictions and Banks’ Institutional Investors (November 20, 2023). SAFE Working Paper No. 392, Available at SSRN: or

Christian Mücke (Contact Author)

Leibniz Institute for Financial Research SAFE ( email )

Theodor-W.-Adorno-Platz 3
Frankfurt am Main, 60323

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