BEAM065 Bank Management
Coursework 2 (60% of the mark for this module)
Submission Deadline: 6th May. Word limit: 3,000.
This assignment consists of two options. Both options are worth 100 marks. YOU NEED TO CHOOSE EITHER OPTION 1 OR OPTION 2.
Option 1
Using data from Compustat for a large sample of banks (at least 50) and over a period of at least 5 years, examine the determinants of bank dividend payouts:
- Fama and French (2001) hypothesis
- Risk-shifting theory
- Signalling theory
- Life-cycle theory
As proxies for dividend payouts, you can use any (or all) of the following variables:
- Dividend-to-asset ratio
- Dividend-to-equity ratio
- Dividend payout ratio
Or you can use dividend payout dummy variables as follows:
- Dividend pay dummy
- Dividend increase dummy
- Dividend decrease dummy
- Dividend omission dummy
In your analysis, you can consider different dimensions/variables, e.g., bank capital, bank size, deposits, and any other, following the relevant literature. Moreover, you can use a variety of specifications (as many as you want, e.g., large banks and small banks or different periods). You should also discuss your results by comparing them with those in the relevant literature. Finally, you should discuss the potential pitfalls of the methodology used (if any).
(100 marks)
(no more than 3,000 words)
IMPORTANT: Foryour analysis you MUST use STATA. The reference list,
tables (including notes and titles of the tables) and figures (including notes and titles of the tables) do NOT count towards the word limit. You do NOT need an introduction or conclusion in your report, but you can divide your report into
three different sections, one to describe briefly your methodology, one foryour dataset (e.g, database used and sample selection), and one for the discussion of the results.
Suggested structure for the report:
1.1 Methodology
1.2 Data
1.3 Discussion of the results
Option 2
Download the annual reports of two banks, “Bank X” and “Bank Y”, for the last 5 years. These two banks must be headquartered in the same country and must be competitors in at least one line of business (e.g., they engage in “retail banking” activities). Then, compare the two banks in terms of:
a) Overall performance and its main drivers
b) Risk profile
c) Corporate governance structure
d) Dividend payout policy (if any)
e) International activities (if any)
f) Funding strategies
g) Hedging strategies (if any)
(100 marks)
(no more than 3,000 words)
IMPORTANT: The reference list does NOT count towards the word limit. You do NOT need an introduction or conclusion in your essay.