DETERMINANTS OF DIVIDEND PAYOUT POLICY IN ETHIOPIAN PRIVATE COMMERCIAL BANKS

Abstract

The researcher of this study decided to conduct a study regarding the determinants of dividend policy of Ethiopian private banks using bank specific factors and macro variables. The main objective of this study was to identify the determinants of dividend policy of Ethiopian private banks. To answer the objective of the study, explanatory study used &the data covered the period from 2009-2018 for the sample of ten Ethiopian private banks and used secondary data. Both bank specific and macroeconomic variables were analyzed by employing the balanced panel fixed effect regression model and the study used dividend policy as a dependent variable and nine independent variables; they are profit, leverage, liquidity, retained earnings, loan loss provision, lagged dividend payout, bank size, economic growth rate and inflation rate. The result of the study revealed that profit, lagged dividend payment has statistically significant impacts on dividend policy of Ethiopian private banks while loan loss provision, leverage have negative and statistically significant impact on dividend policy of Ethiopian private banks whereas liquidity, retained earnings, bank size, inflation and economic growth rate were found to be statistically insignificant and have no any impact on dividend policy of Ethiopian private banks.