Arbeitspapier
Rethinking capital regulation: The case for a dividend prudential target
Recent empirical studies have documented two remarkable patterns shown by euro area banks in the aftermath of the Great Recession: (i) their tendency to boost capital ratios by shrinking assets (contraction of loans supply), and (ii) their reluctance to cut back on dividends (fall in retained earnings). First, I provide evidence of a potential link between these two trends. When shocks hit their pro…ts, banks tend to adjust retained earnings to smooth dividends. This generates bank equity and credit supply volatility. Then I develop a DSGE model that incorporates this mechanism to study the transmission and effects of a novel macroprudential policy rule - that I shall call Dividend Prudential Target (DPT) - aimed at complementing existing capital regulation by tackling this issue. Welfare-maximizing DPTs are effective (more than the CCyB) in smoothing the …financial and the business cycle (by means of less volatile retained earnings) and induce signi…cant welfare gains associated to a Basel III-type of capital regulation through various channels.
- ISBN
-
978-92-899-4076-4
- Sprache
-
Englisch
- Erschienen in
-
Series: ECB Working Paper ; No. 2433
- Klassifikation
-
Wirtschaft
Financial Markets and the Macroeconomy
Policy Objectives; Policy Designs and Consistency; Policy Coordination
Banks; Depository Institutions; Micro Finance Institutions; Mortgages
Financial Institutions and Services: Government Policy and Regulation
Payout Policy
- Thema
-
dividend restrictions
countercyclical capital bu¤
er (CCyB)
capital requirements
macroprudential policy
DSGE models
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Muñoz, Manuel A.
- Ereignis
-
Veröffentlichung
- (wer)
-
European Central Bank (ECB)
- (wo)
-
Frankfurt a. M.
- (wann)
-
2020
- DOI
-
doi:10.2866/648900
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:44 MEZ
Datenpartner
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
Objekttyp
- Arbeitspapier
Beteiligte
- Muñoz, Manuel A.
- European Central Bank (ECB)
Entstanden
- 2020
Ähnliche Objekte (12)
Rethinking capital regulation: The case for a dividend prudential target
Optimal dividends and capital injection under dividend restrictions
Capital-account and counter-cyclical prudential regulations in developing countries
Dividend announcements reconsidered dividend changes versus dividend surprises
Dividend announcements reconsidered: Dividend changes versus dividend surprises
Dividend Announcements Reconsidered: Dividend Changes versus Dividend Surprises
Rethinking the Economics of Capital Mobilityand Capital Controls
Prudential Investors, Inc.
Essays on Capital Structure, Dividend Payments and Quarterly Disclosure
Rethinking the economics of capital mobility and capital controls
Catering dividend: Dividend premium and free cash flow on dividend policy
Optimal Firm's Dividend and Capital Structure for Mean Reverting Profitability
Rethinking capital regulation: The case for a dividend prudential target
Optimal dividends and capital injection under dividend restrictions
Capital-account and counter-cyclical prudential regulations in developing countries
Dividend announcements reconsidered dividend changes versus dividend surprises
Dividend announcements reconsidered: Dividend changes versus dividend surprises
Dividend Announcements Reconsidered: Dividend Changes versus Dividend Surprises
Rethinking the Economics of Capital Mobilityand Capital Controls
Prudential Investors, Inc.
Essays on Capital Structure, Dividend Payments and Quarterly Disclosure
Rethinking the economics of capital mobility and capital controls
Catering dividend: Dividend premium and free cash flow on dividend policy
Optimal Firm's Dividend and Capital Structure for Mean Reverting Profitability
Rethinking capital regulation: The case for a dividend prudential target
Optimal dividends and capital injection under dividend restrictions
Capital-account and counter-cyclical prudential regulations in developing countries
Dividend announcements reconsidered dividend changes versus dividend surprises
Dividend announcements reconsidered: Dividend changes versus dividend surprises
Dividend Announcements Reconsidered: Dividend Changes versus Dividend Surprises
Rethinking the Economics of Capital Mobilityand Capital Controls
Prudential Investors, Inc.
Essays on Capital Structure, Dividend Payments and Quarterly Disclosure
Rethinking the economics of capital mobility and capital controls
Catering dividend: Dividend premium and free cash flow on dividend policy