DETERMINANTS OF DIVIDEND PAYOUT POLICY IN PRIVATE BANKS OF ETHIOPIA

Abstract

The dividend payout policy is one of the most debatable topics within corporate finance and someacademics have called the company’s dividend policy unsolved puzzle. The main objective of this study was to identify the determinants of dividend payout policy ofEthiopian private banks. To answer the objective of the study, explanatory type study used& the data covered the period from 2007-2016 for the sample of eight Ethiopianprivate banks and used secondary data. Bank specific variables were analyzed by employing the balanced panel fixed effect regression model andthe study used dividend payoutpolicy as a dependent variable and six independent variables; they are: profitability, liquidity, leverage, growth, size, and change dividend payout.The result of the study showed that profitability, leverage, size and change in dividend have positive and statistically significant impacts on dividend payout policy of Ethiopian private banks whereas liquidity and growth were found to be statistically insignificant and have no any impact on dividend payout policy of Ethiopian private banks for the study period.