Corporate Governance and Dividend Policy in European Banking

This dissertation investigates corporate governance and dividend policy in banking. This topic has recently attracted the attention of numerous scholars all over the world and currently remains one of the most discussed topics in Banking. The core of the dissertation is constituted by three papers. The first paper generalizes the main achievements in the field of relevant study using the approach of meta-analysis. The second paper provides an empirical analysis of the effect of banking corporate governance on dividend payout. Finally, the third paper investigates empirically the effect of government bailout during 2007-2010 on corporate governance and dividend policy of banks. The dissertation uses a new hand-collected data set with information on corporate governance, ownership structure and compensation structure for a sample of listed banks from 15 European countries for the period 2005-2010. The empirical papers employ such econometric approaches as Within-Group model, difference-in-difference technique, and propensity score matching method based on the Nearest Neighbor Matching estimator. The main empirical results may be summarized as follows. First, we provide evidence that CEO power and connection to government are associated with lower dividend payout ratios. This result supports the view that banking regulators are prevalently concerned about the safety of the bank, and powerful bank CEOs can afford to distribute low payout ratios, at the expense of minority shareholders. Next, we find that government bailout during 2007-2010 changes the banks’ ownership structure and helps to keep lending by bailed bank at the pre-crisis level. Finally, we provide robust evidence for increased control over the banks that receive government money. These findings show the important role of government when overcoming the consequences of the banking crisis, and high quality of governance of public bailouts in European countries.

Essays on the Empirical Analysis of Economic and Political Development in Sub-Saharan Africa

In Sub-Saharan Africa, non-democratic events, like civil wars and coup d'etat, destroy economic development. This study investigates both domestic and spatial effects on the likelihood of civil wars and coup d'etat. To civil wars, an increase of income growth is one of common research conclusions to stop wars. This study adds a concern on ethnic fractionalization. IV-2SLS is applied to overcome causality problem. The findings document that income growth is significant to reduce number and degree of violence in high ethnic fractionalized countries, otherwise they are trade-off. Income growth reduces amount of wars, but increases its violent level, in the countries with few large ethnic groups. Promoting growth should consider ethnic composition. This study also investigates the clustering and contagion of civil wars using spatial panel data models. Onset, incidence and end of civil conflicts spread across the network of neighboring countries while peace, the end of conflicts, diffuse only with the nearest neighbor. There is an evidence of indirect links from neighboring income growth, without too much inequality, to reduce the likelihood of civil wars. To coup d'etat, this study revisits its diffusion for both all types of coups and only successful ones. The results find an existence of both domestic and spatial determinants in different periods. Domestic income growth plays major role to reduce the likelihood of coup before cold war ends, while spatial effects do negative afterward. Results on probability to succeed coup are similar. After cold war ends, international organisations seriously promote democracy with pressure against coup d'etat, and it seems to be effective. In sum, this study indicates the role of domestic ethnic fractionalization and the spread of neighboring effects to the likelihood of non-democratic events in a country. Policy implementation should concern these factors.