This is quite a coincidence because Admati and Hellwig in their book (which we are finishing up this week), The Bankers' New Clothes, support prohibiting banks from paying dividends to encourage banking institutions to increase their equity and reinvest their profits. BoA and the Fed have taken this action in response to an inflated amount of capital that was initially reported.
Interesting that this is happening as Admati and Hellwig commented on. Still, I wonder if this change in Bank of America has to do with increasing capital. That was the goal Admati and Hellwig initially proposed.
This is quite a coincidence because Admati and Hellwig in their book (which we are finishing up this week), The Bankers' New Clothes, support prohibiting banks from paying dividends to encourage banking institutions to increase their equity and reinvest their profits. BoA and the Fed have taken this action in response to an inflated amount of capital that was initially reported.
ReplyDeleteInteresting that this is happening as Admati and Hellwig commented on. Still, I wonder if this change in Bank of America has to do with increasing capital. That was the goal Admati and Hellwig initially proposed.
ReplyDelete