Balancing act: Credit growth and risks from the ECB’s dividend ban
Bianca Popa
In March 2020, the ECB recommended that euro area banks temporarily halt dividend distributions to shareholders and suspend share buybacks. As a result, dividends and the dividend payout ratio were near zero in 2020. This column shows that the dividend ban led to an increase in credit supply in the syndicated loans market. However, the dividend restriction also led to a pronounced decline in banks’ share prices, particularly in the first month of the pandemic. This could pose risks for
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