Current Issues in Economics and Finance
Bank Holding Company Capital Ratios and Shareholder Payouts
September 1998 Volume 4 Number 9
JEL classification: G21, G32

Author: Beverly Hirtle

Last year's sharp drop in the capital ratios of bank holding companies could cast doubt on the companies' future capital strength, especially if credit quality eroded significantly or if profitability weakened. However, an analysis linking the drop in ratios to bank efforts to increase shareholder payouts in a period of strong profitability suggests that these concerns are premature.

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