Banks cut dividends with great reluctance, as if addicted to them. Their apparent addiction is a major cause of concern … for regulators because it could endanger the whole banking system. However, banks may be rational in maintaining elevated … dividends if agency costs are high and dividends substitute for shareholder monitoring. Banks may rely on persistent dividend …

Cash holdings have often been presumed to help resolve the inherent uncertainty of assessing banks. Nonetheless, extant … associated with the cash holdings reported by European banks before, during, and after the financial crisis of 2007-2009. The …. Cash holdings may thus contribute to making banks more opaque. …