Do Banks' Dividends Signal Their Financial Health?
Description:
This paper examines the relation between banks' dividends and their future financial health. Using banks' Nonperforming Loans Ratio, Loan Loss Provision Ratio, and Z-score as proxies for their financial health, I show that there is a strong positive relation between banks' dividends lagged by one quarter and their financial health in the current quarter. This main finding continues to hold following several additional tests, including the application of an instrumental variable approach, the us…
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Date:
August 2018
Creator:
Zheng, Yi
Partner:
UNT Libraries