The Interplay between Dividends and Leverage inside Commercial Banks

Silvia Bressan


The paper analyzes the dividends paid by a large sample of commercial banks in the United States during 2006-2011. The most interesting findings arise after the end of 2008. Our measures for the probability of paying dividends and for the dividend payout ratio are positively related to the banks´ non-deposit leverage. Conversely, banks´ dividends correlate negatively to deposit leverage. We argue that during the crisis of 2007-2009 the liquidity needs of banks resorted more to deposits, than to non-deposit debt. This, in turn, had an impact on banks´ dividend policies, to the extent that firms which could raise deposits preferred to preserve their financial stability, and did not pay huge dividends.

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This work is licensed under a Creative Commons Attribution 4.0 International License.

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International Journal of Financial Research
ISSN 1923-4023(Print)ISSN 1923-4031(Online)


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