Determinants of Dividend Payout Policy of Commercial Banks: Evidence from Selected Commercial Banks in Ethiopia

Desta Zelalem

doi:doi:10.11648/j.ijfbr.20210702.11

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Determinants of Dividend Payout Policy of Commercial Banks: Evidence from Selected Commercial Banks in Ethiopia

Desta Zelalem

Published in International Journal of Finance and Banking Research (Volume 7, Issue 2)

Received: 26 December 2020 Accepted: 9 January 2021 Published: 12 March 2021

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Abstract

The study is about investigation of determinants of dividend payout ratio of commercial banks in Ethiopia over the period 2010-2018. Nine years Panel data was obtained from audited financial statements of 8 selected commercial banks in Ethiopia. The study used six independent variables such as financial leverage, profitability, age of firm, corporate tax rate, operating cash and extent of shares distributed and one dependent variable which is dividend payout ratio. Both descriptive and inferential statistics were used in order to interpret the findings of the study. Random effect regression was used to investigate the impact of determinant factors on the dividend payout policy of commercial banks in Ethiopia. Correlation was also conduct to understand the relationship between dependent and independent variables. The correlation analysis shows that, Return on Equity (ROE), Corporate Tax Rate (CTR), and Number of Shares Distributed (NSD) have Negative relationships with Dividend Payout Ratio (DPO). While the remaining independent variables; Debt Ratio (DR), Age of Firm and Cash to Total Assets Ratio (CTA) have positive relationships with Dividend Payout Ratio (DPO). The key finding of this study shows that, financial leverage is significant variable at 1%, while corporate tax rate, cash balance and extent of shares distributed are significant variables at 10% significant level in determining dividend payout ratio of commercial banks in Ethiopia. on the other hand, profitability and age of firm are not statistically significant variables in determining dividend payout ratio in commercial banks of Ethiopia.

Published in	International Journal of Finance and Banking Research (Volume 7, Issue 2)
DOI	10.11648/j.ijfbr.20210702.11
Page(s)	29-37
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2021. Published by Science Publishing Group

Keywords

Determinants, Dividend Payout, Commercial Banks

References

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[11]	Chekole Demilie (2016). Internal Determinants of Dividend Payout: in Private Commercial Banks in Ethiopia. Unpublished thesis submitted to Addis Ababa University in partial fulfillment of Masters of Accounting and Finance.
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APA Style

Desta Zelalem. (2021). Determinants of Dividend Payout Policy of Commercial Banks: Evidence from Selected Commercial Banks in Ethiopia. International Journal of Finance and Banking Research, 7(2), 29-37. https://doi.org/10.11648/j.ijfbr.20210702.11

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ACS Style

Desta Zelalem. Determinants of Dividend Payout Policy of Commercial Banks: Evidence from Selected Commercial Banks in Ethiopia. Int. J. Finance Bank. Res. 2021, 7(2), 29-37. doi: 10.11648/j.ijfbr.20210702.11

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AMA Style

Desta Zelalem. Determinants of Dividend Payout Policy of Commercial Banks: Evidence from Selected Commercial Banks in Ethiopia. Int J Finance Bank Res. 2021;7(2):29-37. doi: 10.11648/j.ijfbr.20210702.11

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@article{10.11648/j.ijfbr.20210702.11,
  author = {Desta Zelalem},
  title = {Determinants of Dividend Payout Policy of Commercial Banks: Evidence from Selected Commercial Banks in Ethiopia},
  journal = {International Journal of Finance and Banking Research},
  volume = {7},
  number = {2},
  pages = {29-37},
  doi = {10.11648/j.ijfbr.20210702.11},
  url = {https://doi.org/10.11648/j.ijfbr.20210702.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijfbr.20210702.11},
  abstract = {The study is about investigation of determinants of dividend payout ratio of commercial banks in Ethiopia over the period 2010-2018. Nine years Panel data was obtained from audited financial statements of 8 selected commercial banks in Ethiopia. The study used six independent variables such as financial leverage, profitability, age of firm, corporate tax rate, operating cash and extent of shares distributed and one dependent variable which is dividend payout ratio. Both descriptive and inferential statistics were used in order to interpret the findings of the study. Random effect regression was used to investigate the impact of determinant factors on the dividend payout policy of commercial banks in Ethiopia. Correlation was also conduct to understand the relationship between dependent and independent variables. The correlation analysis shows that, Return on Equity (ROE), Corporate Tax Rate (CTR), and Number of Shares Distributed (NSD) have Negative relationships with Dividend Payout Ratio (DPO). While the remaining independent variables; Debt Ratio (DR), Age of Firm and Cash to Total Assets Ratio (CTA) have positive relationships with Dividend Payout Ratio (DPO). The key finding of this study shows that, financial leverage is significant variable at 1%, while corporate tax rate, cash balance and extent of shares distributed are significant variables at 10% significant level in determining dividend payout ratio of commercial banks in Ethiopia. on the other hand, profitability and age of firm are not statistically significant variables in determining dividend payout ratio in commercial banks of Ethiopia.},
 year = {2021}
}

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TY  - JOUR
T1  - Determinants of Dividend Payout Policy of Commercial Banks: Evidence from Selected Commercial Banks in Ethiopia
AU  - Desta Zelalem
Y1  - 2021/03/12
PY  - 2021
N1  - https://doi.org/10.11648/j.ijfbr.20210702.11
DO  - 10.11648/j.ijfbr.20210702.11
T2  - International Journal of Finance and Banking Research
JF  - International Journal of Finance and Banking Research
JO  - International Journal of Finance and Banking Research
SP  - 29
EP  - 37
PB  - Science Publishing Group
SN  - 2472-2278
UR  - https://doi.org/10.11648/j.ijfbr.20210702.11
AB  - The study is about investigation of determinants of dividend payout ratio of commercial banks in Ethiopia over the period 2010-2018. Nine years Panel data was obtained from audited financial statements of 8 selected commercial banks in Ethiopia. The study used six independent variables such as financial leverage, profitability, age of firm, corporate tax rate, operating cash and extent of shares distributed and one dependent variable which is dividend payout ratio. Both descriptive and inferential statistics were used in order to interpret the findings of the study. Random effect regression was used to investigate the impact of determinant factors on the dividend payout policy of commercial banks in Ethiopia. Correlation was also conduct to understand the relationship between dependent and independent variables. The correlation analysis shows that, Return on Equity (ROE), Corporate Tax Rate (CTR), and Number of Shares Distributed (NSD) have Negative relationships with Dividend Payout Ratio (DPO). While the remaining independent variables; Debt Ratio (DR), Age of Firm and Cash to Total Assets Ratio (CTA) have positive relationships with Dividend Payout Ratio (DPO). The key finding of this study shows that, financial leverage is significant variable at 1%, while corporate tax rate, cash balance and extent of shares distributed are significant variables at 10% significant level in determining dividend payout ratio of commercial banks in Ethiopia. on the other hand, profitability and age of firm are not statistically significant variables in determining dividend payout ratio in commercial banks of Ethiopia.
VL  - 7
IS  - 2
ER  -

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Author Information

Desta Zelalem

Department of Accounting and Finance, Collage of Business and Economics, Hawassa University, Hawassa, Ethiopia

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APA Style

Desta Zelalem. (2021). Determinants of Dividend Payout Policy of Commercial Banks: Evidence from Selected Commercial Banks in Ethiopia. International Journal of Finance and Banking Research, 7(2), 29-37. https://doi.org/10.11648/j.ijfbr.20210702.11

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ACS Style

Desta Zelalem. Determinants of Dividend Payout Policy of Commercial Banks: Evidence from Selected Commercial Banks in Ethiopia. Int. J. Finance Bank. Res. 2021, 7(2), 29-37. doi: 10.11648/j.ijfbr.20210702.11

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AMA Style

Desta Zelalem. Determinants of Dividend Payout Policy of Commercial Banks: Evidence from Selected Commercial Banks in Ethiopia. Int J Finance Bank Res. 2021;7(2):29-37. doi: 10.11648/j.ijfbr.20210702.11

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@article{10.11648/j.ijfbr.20210702.11,
  author = {Desta Zelalem},
  title = {Determinants of Dividend Payout Policy of Commercial Banks: Evidence from Selected Commercial Banks in Ethiopia},
  journal = {International Journal of Finance and Banking Research},
  volume = {7},
  number = {2},
  pages = {29-37},
  doi = {10.11648/j.ijfbr.20210702.11},
  url = {https://doi.org/10.11648/j.ijfbr.20210702.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijfbr.20210702.11},
  abstract = {The study is about investigation of determinants of dividend payout ratio of commercial banks in Ethiopia over the period 2010-2018. Nine years Panel data was obtained from audited financial statements of 8 selected commercial banks in Ethiopia. The study used six independent variables such as financial leverage, profitability, age of firm, corporate tax rate, operating cash and extent of shares distributed and one dependent variable which is dividend payout ratio. Both descriptive and inferential statistics were used in order to interpret the findings of the study. Random effect regression was used to investigate the impact of determinant factors on the dividend payout policy of commercial banks in Ethiopia. Correlation was also conduct to understand the relationship between dependent and independent variables. The correlation analysis shows that, Return on Equity (ROE), Corporate Tax Rate (CTR), and Number of Shares Distributed (NSD) have Negative relationships with Dividend Payout Ratio (DPO). While the remaining independent variables; Debt Ratio (DR), Age of Firm and Cash to Total Assets Ratio (CTA) have positive relationships with Dividend Payout Ratio (DPO). The key finding of this study shows that, financial leverage is significant variable at 1%, while corporate tax rate, cash balance and extent of shares distributed are significant variables at 10% significant level in determining dividend payout ratio of commercial banks in Ethiopia. on the other hand, profitability and age of firm are not statistically significant variables in determining dividend payout ratio in commercial banks of Ethiopia.},
 year = {2021}
}

Copy | Download

TY  - JOUR
T1  - Determinants of Dividend Payout Policy of Commercial Banks: Evidence from Selected Commercial Banks in Ethiopia
AU  - Desta Zelalem
Y1  - 2021/03/12
PY  - 2021
N1  - https://doi.org/10.11648/j.ijfbr.20210702.11
DO  - 10.11648/j.ijfbr.20210702.11
T2  - International Journal of Finance and Banking Research
JF  - International Journal of Finance and Banking Research
JO  - International Journal of Finance and Banking Research
SP  - 29
EP  - 37
PB  - Science Publishing Group
SN  - 2472-2278
UR  - https://doi.org/10.11648/j.ijfbr.20210702.11
AB  - The study is about investigation of determinants of dividend payout ratio of commercial banks in Ethiopia over the period 2010-2018. Nine years Panel data was obtained from audited financial statements of 8 selected commercial banks in Ethiopia. The study used six independent variables such as financial leverage, profitability, age of firm, corporate tax rate, operating cash and extent of shares distributed and one dependent variable which is dividend payout ratio. Both descriptive and inferential statistics were used in order to interpret the findings of the study. Random effect regression was used to investigate the impact of determinant factors on the dividend payout policy of commercial banks in Ethiopia. Correlation was also conduct to understand the relationship between dependent and independent variables. The correlation analysis shows that, Return on Equity (ROE), Corporate Tax Rate (CTR), and Number of Shares Distributed (NSD) have Negative relationships with Dividend Payout Ratio (DPO). While the remaining independent variables; Debt Ratio (DR), Age of Firm and Cash to Total Assets Ratio (CTA) have positive relationships with Dividend Payout Ratio (DPO). The key finding of this study shows that, financial leverage is significant variable at 1%, while corporate tax rate, cash balance and extent of shares distributed are significant variables at 10% significant level in determining dividend payout ratio of commercial banks in Ethiopia. on the other hand, profitability and age of firm are not statistically significant variables in determining dividend payout ratio in commercial banks of Ethiopia.
VL  - 7
IS  - 2
ER  -

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