Regionales Clustering im Ausschüttungsverhalten von Sparkassen

Abstract

A significant part of German savings banks does not pay out dividends when they are legally possible. Previous studies show that the conservative payout policy is related to the capitalization and the size of a savings bank and the financial standing of its local authority. This study reports evidence for a regional clustering in addition to the known economic determinants. Our result suggests that savings banks are more prone to paying dividends when the neighboring banks do the same. We hypothesize this clustering to be caused by a multi-stage principal agent relationship in German savings banks. One consequence of this structure is that the representatives of the local authority in the savings bank’s governing board will typically advocate higher dividends than the management. However, they cannot bring to bear their dividend recommendation because they have an information disadvantage with respect to the bank’s management. In such a situation, it is but natural to use the payout policy of neighboring savings banks as a reference point. We propose a test of this hypothesis based on data for all German savings banks in 2005 and 2006. In Probit and (modified) Tobit regressions, our distance measure turns out to be by far the most important determinant of the probability and size of dividend payouts.