Bank Holding Company Capital Ratios and Shareholder Payouts
نویسنده
چکیده
Such high shareholder payouts might be seen as a threat to banking institutions’ capital strength if profitability faltered. However, we find that the sharp rise in shareholder payouts during 1997 appears to have been driven primarily by increases in net stock repurchases rather than by a run-up in dividend payments. The composition of these payouts is important because banking companies can cut back on repurchases more easily than they can reduce dividend payments if earnings begin to drop. For this reason, the recent increase in overall shareholder payouts by bank holding companies may not be cause for immediate concern.
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