Bank Capital Depletion Through Fair Value Accounting Justified Dividends: Evidence From South Africa. Phillip de Jager. Introduction. Larry Summers – “was it the spark that started the forest fire or the timber dry condition of the forest”. Other studies. Anderson et al (2007) – S&P study
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Phillip de Jager
Larry Summers – “was it the spark that started the forest fire or the timber dry condition of the forest”
Graphical representation of the total monthly bank net profit after tax in South Africa.
Stationary residuals obtained by regressing NP on GDP.
Time-series obtained by combining different mark-to-market and fair value entries; the difference between M2M1 and M2M2 is that for January 2001 – December 2007 M2M2 also include trading book mark-to-market entries.
The percentage of total bank profit available for distribution paid out as a dividend
Firstrand 2011: “The total capital plan includes a dividend policy, which is set in order to ensure sustainable dividend cover based on sustainable normalised earnings. This also takes into account volatile earnings brought on by fair value accounting…”
Investec 2010: “Annual performance bonuses are closely linked to business performance, based on target business unit performance goals determined in the main by realised EVA profit performance…”