Bank cash-reserve management and payout policy under peer pressure

Bank cash-reserve management and payout policy under peer pressure

• Author
• Diogo Duarte
• Co-authors
• Özde Öztekin , Yuri Saporito
• Abstract

• We examine the interplay between cash reserve management, dividend
  policies, bankruptcy risk, and peer pressure in the banking sector, utiliz-
  ing a blend of continuous-time economic modeling and empirical analysis of
  Federal Reserve Y-9C report data from 1987-2020. Our findings reveal that
  peer pressure significantly influences banks’ liquidity strategies and dividend
  behaviors, promoting increased cash reserves and moderated dividend pay-
  outs, thereby leading to improved bank risk profiles. This study underscores
  the importance of peer dynamics in shaping financial strategies, offering im-
  portant insights for policymakers and banking executives. It highlights the
  need for regulatory frameworks that recognize the role of peer influence,
  encouraging practices that enhance financial stability and resilience

• Keywords
• Bank cash-reserve management, payout policy, peer pressure
• Modality
• Comunicação oral
• Subject Area
• Finanças Corporativas e Bancárias (Corporate Finance and Banking)

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