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Bank Dividends, Real GDP Growth, and Default Risk

Kanas, Angelos (2014) Bank Dividends, Real GDP Growth, and Default Risk. International Jounral of Finance & Economics, . ISSN 1099 - 1158. (doi:10.1002/ijfe.1491) (The full text of this publication is not currently available from this repository. You may be able to access a copy if URLs are provided) (KAR id:41117)

The full text of this publication is not currently available from this repository. You may be able to access a copy if URLs are provided.
Official URL:
http://dx.doi.org/10.1002/ijfe.1491

Abstract

We reveal evidence that the US aggregate bank dividends exercise a causal impact on the US real GDP growth during the period from the introduction of the Prompt Corrective Action framework in 1992 until the outburst of the subprime mortgage market crisis in 2007. Over this period, the positive signalling effects of bank dividends outperform the negative effect of dividends on default risk. During the pre-Prompt Corrective Action and the recent post-2007 periods, bank dividends do not affect GDP growth. This regime-dependent relation is due to an asymmetric role of bank default risk. These findings are of interest to bank regulators in reassessing the role of bank dividends within Basel III and carry important policy implications as bank dividends constitute an important tool available to policy makers for strengthening real activity. Copyright © 2014 John Wiley & Sons, Ltd.

Item Type: Article
DOI/Identification number: 10.1002/ijfe.1491
Uncontrolled keywords: Bank dividends; default risk; z-score; PCA; regime switching; policy
Subjects: H Social Sciences > HG Finance
Divisions: Divisions > Kent Business School - Division > Kent Business School (do not use)
Depositing User: Tracey Pemble
Date Deposited: 22 May 2014 10:36 UTC
Last Modified: 17 Aug 2022 10:57 UTC
Resource URI: https://kar.kent.ac.uk/id/eprint/41117 (The current URI for this page, for reference purposes)

University of Kent Author Information

Kanas, Angelos.

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