Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/120787 
Authors: 
Year of Publication: 
2014
Series/Report no.: 
Staff Report No. 666
Publisher: 
Federal Reserve Bank of New York, New York, NY
Abstract: 
Many large U.S. bank holding companies (BHCs) continued to pay dividends during the recent financial crisis, even as financial market conditions deteriorated, large losses accumulated, and emergency capital and liquidity were being provided by the official sector. In contrast, share repurchases by these BHCs dropped sharply in the early part of the crisis. Documenting this divergent behavior is one of the key contributions of this paper, as previous analysis has tended to focus on dividend payments alone. The paper also examines the role that repurchases played in large BHCs' decisions to reduce or eliminate dividends. Did BHCs with a high level of repurchases prior to the financial crisis cut dividends later, or by less, than BHCs with lower levels of pre-crisis repurchases? The key findings are that the smaller BHCs in the sample (those with assets between $5 billion and $25 billion) with higher levels of repurchases before the financial crisis reduced dividends later and by less than BHCs with lower pre-crisis repurchases. In contrast, larger BHCs with higher pre-crisis repurchases tended to reduce their dividends earlier in the financial crisis, though there is no relationship between pre-crisis repurchases and the size of dividend reductions for these institutions.
Subjects: 
bank capital
stock repurchases
bank dividends
financial crisis
JEL: 
G01
G21
G28
G35
Document Type: 
Working Paper

Files in This Item:
File
Size
862.35 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.