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Dividend policy in Norwegian banking before 1914

Published online by Cambridge University Press:  18 February 2011

Lars Fredrik Øksendal
Lars Fredrik Øksendal*
Affiliation:
Norges Bank and Norwegian School of Economics and Business Administration
*
Lars.Oksendal@nhh.no
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Abstract

This article discusses the dividend strategy adopted by Norwegian commercial banks before 1914. Based on a unique data set covering all banks in the period 1882– 1913 as well as six other institutions for the pre-1882 period, I identify the existence of a strong bias towards the payment of high and stable dividends to shareholders. The origins of such bias lie in the specific institutional set-up of commercial banking, the expectations of shareholders and the absence of developed securities markets. Combined with a strong preference for high gearing, this feature contributed to increase the fragility of the Norwegian banking system.

Keywords

commercial banksdivided policybanking structureNorway

JEL classification

N23: Europe: Pre-1913

Information

Type
Articles
Information
Financial History Review , Volume 18 , Issue 2 , August 2011 , pp. 217 - 241
Copyright
Copyright © European Association for Banking and Financial History e.V. 2011

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