2006 Fiscal Year Final Research Report Summary

Dividend Policies in the Banking Industry and the Effectiveness of Shareholder Governance

Research Project

Project/Area Number	17530246
Research Category	Grant-in-Aid for Scientific Research (C)
Allocation Type	Single-year Grants
Section	一般
Research Field	Public finance/Monetary economics
Research Institution	Yokohama City University
Principal Investigator	SUI Quing-yuan Yokohama City University, International College of Arts and Sciences, Professor, 国際総合科学部, 教授 (80244408)
Project Period (FY)	2005 – 2006
Keywords	dividend policy / credit explosion / nonperforming loan / bank management
Research Abstract	We confirmed that banks had kept a stable dividend policy even in the period of the occurence and the burst of bubble. We also find the dividend payments in the banking industry are influenced by credit growth stronger than by profits. On the other hand, the correlation between dividend payments and credit growth are not as strong as that between employees' income and credit growth. It indicates shareholders are hardly the residual profit claimers. In the period of financial crisis, the growth rate of dividend payments positively correlated with the growth rate of nonperforming loan. These evidence suggests that the effectiveness of governmance power from shareholder to bank managements is limited.

(4 results)