How Do Depositors Respond to Bank Dividend Policy? Evidence from Market Discipline, Global Financial Crisis and COVID-19 Pandemic

Our study investigates how depositors respond to the bank dividend policy via interest rate channel. The results suggests that by paying dividend, banks mitigate information asymmetry between insiders and outsiders, then enjoying a lower deposit cost than do not pay dividend. Dividend-paying are subject higher funding costs may enjoy greater decrease of non-payers. Banks under pressure from regulators, but encounter losses have when deciding emphasizes downside insurance scheme documenting indifference insured uninsured during global financial crisis, COVID-19 suggesting wake-up calls for depositors.