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Bank dividends, risk, and regulatory regimes

Kanas, Angelos (2013) Bank dividends, risk, and regulatory regimes. Journal of Banking and Finance, 37 (1). pp. 1-10. ISSN 0378-4266. (doi:10.1016/j.jbankfin.2012.05.018) (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)

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. (Contact us about this Publication)
Official URL
http://dx.doi.org/10.1016/j.jbankfin.2012.05.018

Abstract

This paper investigates the relation between bank dividends and bank risk over the period 1984-2011, and assesses the existence of risk-taking and risk-shifting in the US commercial banking sector subject to regulatory regime changes. The introduction of PCA in 1992 and TARP in 2008 constitute significant regulatory regime changes, and provide the necessary framework to explore whether regime-dependent risk-shifting or risk-taking is present. We find strong evidence of risk-shifting and risk-taking over the post-PCA regime spanning the period 1992-2008. We interpret this evidence as indication of ineffectiveness of PCA in controlling risk-taking and risk-shifting. The finding of risk-taking just prior to the recent financial crisis suggests that risk-taking may be a factor contributing to this crisis. As risk-taking and risk-shifting are important aspects of bank behavior (Basel Committee on Banking Supervision, 2009), these results are of interest to bank regulators and important to Basel III. © 2012.

Item Type: Article
DOI/Identification number: 10.1016/j.jbankfin.2012.05.018
Uncontrolled keywords: Bank risk, Commercial banks, Dividends, PCA, Risk-shifting, Risk-taking, TARP
Subjects: H Social Sciences > HG Finance
Divisions: Faculties > Social Sciences > Kent Business School > Accounting and Finance
Depositing User: Tracey Pemble
Date Deposited: 22 May 2014 11:04 UTC
Last Modified: 29 May 2019 12:36 UTC
Resource URI: https://kar.kent.ac.uk/id/eprint/41124 (The current URI for this page, for reference purposes)
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