Have European banks maintained their payout policy during the crisis? The role of scrip dividends

We analyse the trend among 79 banks from 20 European countries towards scrip dividends. Whereas banks do not seem to smooth cash dividends, they do smooth total dividends, which include both cash and scrip dividends. We also find that the new legal requirements (resulting from the Basel III Accord a...

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Bibliographic Details
Published in:	International journal of finance and economics Vol. 27; no. 4; pp. 4619 - 4632
Main Authors:	Blanco‐Alcántara, David, Gallud‐Cano, Jorge, López‐Iturriaga, Félix J., López‐de‐Foronda, Óscar
Format:	Journal Article
Language:	English
Published:	Chichester, UK John Wiley & Sons, Ltd 01-10-2022 Wiley Periodicals Inc
Subjects:	Banking industry Basel accords Capital requirements Capital stringency Dividend distributions dividends European banks payout scrip dividends shareholder protection Europe
Online Access:	Get full text
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Summary:	We analyse the trend among 79 banks from 20 European countries towards scrip dividends. Whereas banks do not seem to smooth cash dividends, they do smooth total dividends, which include both cash and scrip dividends. We also find that the new legal requirements (resulting from the Basel III Accord and other country‐level laws) have different implications on cash and scrip dividends. Whereas the need for better and more capital imposed by these rules has led banks to cut cash dividends, there is a positive relationship between the legal requirements on capital adequacy and scrip dividends.
ISSN:	1076-9307 1099-1158
DOI:	10.1002/ijfe.2391