Competition and Bank Payout Policy

Leveraging branch-level data on bank deposits, we provide evidence of a negative impact branching restrictions payout ratios, which occurs only for banks with low charter value, as proxied by the market-to-book ratio. The results ratio extend to Lerner index, return assets, and Z-score, suggesting that risk-shifting incentives drive our rather than signaling or agency costs. Our are robust different proxies banking competition identification strategies, bootstrap simulations suggest not due confounding factors.