- Journal of Business Economics and Finance
- Vol: 3 Issue: 3
- Capital Distributions in the Banking Industry
Capital Distributions in the Banking Industry
Authors : Monica Banyi, Susan Porter, Susan Williams
Pages : 371-397
View : 5 | Download : 3
Publication Date : 2014-09-01
Article Type : Other
Abstract :As the 2008 banking disaster loomed banks increased their dividends and stock repurchase distributions to common shareholders dramatically. This unique time period provides a natural experimental setting to examine financial institutions' capital management strategies during periods of macroeconomic change. As the crisis loomed, we find that U.S. banks did not conserve cash but returned capital to investors at the same pace that they earned capital from operations. We also find that U.S. firms that accepted funds from the Capital Purchase Program (CPP) relative to nonCPP firms, returned a higher proportion of their available capital to shareholders in the periods leading up to the financial crisis.Keywords : Bank Crisis, stock repurchases, dividends