dSEA Papers

"Real regulatory capital management and bank payouts: Evidence from available‐for‐sale securities"

In this paper published in the Journal of Business Finance and Accounting, Michele Fabrizi (Department of Economics and Management of the University of Padua), Elisabetta Ipino (Seattle Pacific University), Michel Magnan (John Molson School of Business, Concordia University) and Antonio Parbonetti (Department of Economics and Management of the University of Padua) examine whether payout policies create incentives for banks to engage in cherry‐picking activities using available‐for‐sale (AfS) securities, otherwise known as gains trading. Using a large sample comprising 766 unique US banks, they find a significant and positive association between total payout and realized gains on AfS securities for banks with low regulatory capital. 

Read the full abstract and article here: https://onlinelibrary.wiley.com/doi/abs/10.1111/jbfa.12525