Bank Value and Dividend Policy Relation: Connecting Studies on Two Dimensions

32 Pages Posted: 22 Dec 2011 Last revised: 15 Aug 2012

See all articles by Ramilya Galiakhmetova

Ramilya Galiakhmetova

University of Bologna - Department of Management

Giuseppe Torluccio

University of Bologna - Department of Management; Università degli studi di Modena e Reggio Emilia (UNIMORE) - Center for Research in Banking and Finance (CEFIN)

Date Written: December 21, 2011

Abstract

This research investigates the relationship between value and dividend policy in a bank, based on relevant empirical literature developed during the last twenty years. The approach of meta-analysis employed here allows studies to be grouped and analyzed according to precise research questions and those with similar constructs. The results achieved help to support several theories explaining banking dividend behavior and its relation with value. One important result confirms the ideas of the constructive theorists' school suggesting the positive effect of dividend distribution on bank value, and thus provides momentum for resolving the conflict between two opposite schools in this field of research. Another result provides practical guidance for investors, by implying a significant and negative relation between the bank's market-to-book ratio and dividend paid per share. Finally, the study confirms a significant interrelation between bank value and dividend policy, in particular the strong market effect of cutting dividends for large banks, and reveals the existence of a serious regulatory problem.

Keywords: Banking, Dividend policy, Bank value, Meta-analysis

JEL Classification: G21, G35, G38, C49

Suggested Citation

Galiakhmetova, Ramilya and Torluccio, Giuseppe, Bank Value and Dividend Policy Relation: Connecting Studies on Two Dimensions (December 21, 2011). Available at SSRN: https://ssrn.com/abstract=1975346 or http://dx.doi.org/10.2139/ssrn.1975346

Ramilya Galiakhmetova (Contact Author)

University of Bologna - Department of Management ( email )

via Capo di Luca 34
Bologna, 40126
Italy
+39 051 2098085 (Phone)

HOME PAGE: http://www.sa.unibo.it/SA/default.htm

Giuseppe Torluccio

University of Bologna - Department of Management ( email )

via Capo di Lucca 34
40126 Bologna
Italy
+39 051 2098085 (Phone)

HOME PAGE: http://WWW.SA.UNIBO.IT

Università degli studi di Modena e Reggio Emilia (UNIMORE) - Center for Research in Banking and Finance (CEFIN) ( email )

via Berengario 51
Modena, modena I-41100
Italy

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