Growth & Profitability of Private Commercial Banks: Major Indicator of Its Dividend Policy

Yasir Khan; Liaqat Ali; Saima Batool; Azmat Ali

doi:doi:10.11648/j.ajomis.20170204.12

| Peer-Reviewed

Growth & Profitability of Private Commercial Banks: Major Indicator of Its Dividend Policy

Yasir Khan, Liaqat Ali, Saima Batool, Azmat Ali

Published in American Journal of Operations Management and Information Systems (Volume 2, Issue 4)

Received: 20 August 2017 Accepted: 5 September 2017 Published: 26 October 2017

Views: Downloads:

Download PDF

Share This Article

Twitter
Linked In
Facebook

Abstract

The study was conducted to check whether the growth and profitability is the major indicator of bank’s best dividend policy. The research was conducted in the banking sector of Pakistan. The commercial banks working in Pakistan was taken as a sample of the study. On the basis of the dividend payment, 20 banks were selected for the data collection. The data was collected from 2008 to 2014. Bank size and leverage was taken as control variables. As per the results of chow test’s, fixed effect in case of profitability & pooled OLS in case of growth is appropriate for the data analysis. White’s test shows that the data is heteroskedastic so the final results were analyzed by fixed effect model with robust and no issue of heteroskedasticity in growth data. As per the results of fixed effect model; 1) DPO has negative and insignificant effects on bank dividend policy (null accepted); 2) Firm size has positive and significant effects on bank dividend policy; 3) Leverage has negative and significant effects on dividend policy; As per the results of pooled OLS for growth; 1) DPO has positive and significant effects on bank dividend policy (Alternate accepted); 2) Firm size has positive and significant effects on bank dividend policy; 3) Leverage has negative and insignificant effects on dividend policy.

Published in	American Journal of Operations Management and Information Systems (Volume 2, Issue 4)
DOI	10.11648/j.ajomis.20170204.12
Page(s)	92-96
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), 2024. Published by Science Publishing Group

Keywords

Growth, Profitability, Dividend Policy, Commercial Banks, Fixed Effect Etc

References

[1]	Ajanthan, A. (2013) The Relationship between Dividend Payout and Firm Profitability: A Study of Listed Hotels and Restaurant Companies in Sri Lanka, International Journal of Scientific and Research Publications, 3(6).
[2]	Aivazian, V., Booth, L., & Cleary, S. (2003). Do emerging market firms follow different dividend policies from U.S. firms? Journal of Financial Research, 26, 371-387.
[3]	Ahmed, H., & Javed, A. Y. (2009). The determinants of dividend policy in Pakistan. International Research Journal of Finance and Economics, 1450-2887.
[4]	Al-Twaijry, AA 2007, “Dividend policy and payout ratio: Evidence from the Kuala Lumpur Stock Exchange”, The Journal of Risk Finance, Vol. 8 No. 4, pp. 349-363.
[5]	Alli, K. L., Khan, A. Q., & Ramirez, G. G. (1993). Determinants of corporate dividend policy: A factorial analysis. The Finance Review, 28, 523-547.
[6]	Al-Najjar, B 2009, ‘Dividend behaviour and smoothing new evidence from Jordanian panel data’, Studies in Economics and Finance, vol. 26, no. 3, pp. 182-197.
[7]	Brealey, RA Myers, SC and Allen, F 2010, Principles of corporate finance, Ninth edition, McGraw Hill International edition.
[8]	Baker, H. K., & Powell, G. E. (1999). How corporate managers view dividend policy? Quarterly European Scientific Journal May edition vol. 8, No. 9 ISSN: 1857 – 7881 (Print) e - ISSN 1857-7431 214.
[9]	Baker, H. K., Veit, E. T., & Powell, G. E. (2001). Factors influencing dividend policy decisions of Nasdaq firms. The Financial Review, 36(3), 19-37.
[10]	De Angelo, H., & De Angelo, L. (2006). Payout policy pedagogy: What matters and why Working paper, University of Southern California
[11]	De Angelo, H., De Angelo, L., & Stulz, R. (2006). Dividend Policy and the earned/contributed capital mix: a test of the life-cycle theory. Journal of Financial Economics, 81, 227-254.
[12]	Fama, EF and French, KR 2001, “Disappearing dividends: Changing firm characteristics or lower propensity to pay?”, Journal of Financial Economics, Vol 60(1), pp. 3-43.
[13]	Farsio, F., Geary, A., & Moser, J. (2004). The relationship between dividends and earnings. Journal for Economic Educators, 4(4), 1–5.
[14]	Frankfurter, G. M., & Mc Goun, E. G. (2000). Thought Contagion and Financial Economics: The Dividend Puzzle as a Case Study. The Journal of Psychology and Financial Markets, 1(2), 145–153.
[15]	Grullon, Gustavo, Roni Michaely and Bhaskaran Swaminathan. 2002. “Are Dividend Changes a Sign of Firm Maturity?” Journal of Business, 75:3, 387-424.
[16]	Glen, J. D., Karmokolias, Y., Miller, R. R., & Shah, S. (1995). Dividend policy and behavior in emerging markets: To pay or not to pay, IFC Discussion paper 26, Washington DC: International Finance Corporation.
[17]	Gill. A., Biger, N., & Tibrewala, R. (2010). Determinants of dividend payout ratios: Evidence from United States. The Open Business Journal, 3, 8-14.
[18]	Holder, M. E., Langrehr, F. W., & Hexter, J. L. (1998). Dividend policy determinants: an investigation of the influences of stakeholder theory. Financial Management, 27, 73-82.
[19]	Jensen, M. C., & Meckling, W. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3, 305-360.
[20]	Jensen, M. C. (1986). Agency costs of free cash flow, corporate finance and takeovers. American Economic Review, 76, 323-329.
[21]	Kania, S. L., & Bacon, F. W. (2005). What factors motivate the corporate dividend decision?. ASBBS E-Journal, 1, 97-107.
[22]	Miller, M and Modigliani, F 1961, “Dividend policy, growth and the valuation of shares”, Journal of Business, Vol. 34, pp. 411-433.
[23]	Mizuno, M. (2007). Payout policy of Japanese firms: analysis on the survey of four industries listed on the Tokyo Stock Exchange. Pacific Economic Review, 12(5), 631-650.
[24]	Murhadi, WR 2008, ‘Study on dividend policy in Indonesian capital market’, Journal Manajemen & Kewirausahaan, vol. 1, issue: March, pp. 1-29.
[25]	Mehar, A 2003, ‘Corporate governance and dividend policy’, Pakistan Economic and Social Review, vol. 1, no. 43, pp. 115-128.
[26]	Mehta, A. (2012) An Empirical Analysis of Determinants of Dividend Policy - Evidence from the UAE Companies, Global Review of Accounting and Finance Vol. 3. No. 1. March 2012. 18–31.
[27]	Nissim, D. & Ziv, D. (2001) “Dividend changes and future profitability”, Journal of Finance, vol. 56 (6): 2111–2133.
[28]	Ross, S. A., Westerfield, R. W. & Jaffe, J. (2002) Corporate Finance (6th ed.), shares”, Journal of Business, vol. 34: 411-433.
[29]	Ramcharran, H. (2001), “An empirical model of dividend policy in emerging equity markets”, Emerging Markets Quarterly, 5, 39-49.
[30]	Rozeff, M. (1982). Growth, beta and agency costs as determinants of dividend payout ratios. Journal of Financial Research, 5, 249-259.

Cite This Article

Plain Text BibTeX RIS

APA Style

Yasir Khan, Liaqat Ali, Saima Batool, Azmat Ali. (2017). Growth & Profitability of Private Commercial Banks: Major Indicator of Its Dividend Policy. American Journal of Operations Management and Information Systems, 2(4), 92-96. https://doi.org/10.11648/j.ajomis.20170204.12

Copy | Download

ACS Style

Yasir Khan; Liaqat Ali; Saima Batool; Azmat Ali. Growth & Profitability of Private Commercial Banks: Major Indicator of Its Dividend Policy. Am. J. Oper. Manag. Inf. Syst. 2017, 2(4), 92-96. doi: 10.11648/j.ajomis.20170204.12

Copy | Download

AMA Style

Yasir Khan, Liaqat Ali, Saima Batool, Azmat Ali. Growth & Profitability of Private Commercial Banks: Major Indicator of Its Dividend Policy. Am J Oper Manag Inf Syst. 2017;2(4):92-96. doi: 10.11648/j.ajomis.20170204.12

Copy | Download

@article{10.11648/j.ajomis.20170204.12,
  author = {Yasir Khan and Liaqat Ali and Saima Batool and Azmat Ali},
  title = {Growth & Profitability of Private Commercial Banks: Major Indicator of Its Dividend Policy},
  journal = {American Journal of Operations Management and Information Systems},
  volume = {2},
  number = {4},
  pages = {92-96},
  doi = {10.11648/j.ajomis.20170204.12},
  url = {https://doi.org/10.11648/j.ajomis.20170204.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ajomis.20170204.12},
  abstract = {The study was conducted to check whether the growth and profitability is the major indicator of bank’s best dividend policy. The research was conducted in the banking sector of Pakistan. The commercial banks working in Pakistan was taken as a sample of the study. On the basis of the dividend payment, 20 banks were selected for the data collection. The data was collected from 2008 to 2014. Bank size and leverage was taken as control variables. As per the results of chow test’s, fixed effect in case of profitability & pooled OLS in case of growth is appropriate for the data analysis. White’s test shows that the data is heteroskedastic so the final results were analyzed by fixed effect model with robust and no issue of heteroskedasticity in growth data. As per the results of fixed effect model; 1) DPO has negative and insignificant effects on bank dividend policy (null accepted); 2) Firm size has positive and significant effects on bank dividend policy; 3) Leverage has negative and significant effects on dividend policy; As per the results of pooled OLS for growth; 1) DPO has positive and significant effects on bank dividend policy (Alternate accepted); 2) Firm size has positive and significant effects on bank dividend policy; 3) Leverage has negative and insignificant effects on dividend policy.},
 year = {2017}
}

Copy | Download

TY  - JOUR
T1  - Growth & Profitability of Private Commercial Banks: Major Indicator of Its Dividend Policy
AU  - Yasir Khan
AU  - Liaqat Ali
AU  - Saima Batool
AU  - Azmat Ali
Y1  - 2017/10/26
PY  - 2017
N1  - https://doi.org/10.11648/j.ajomis.20170204.12
DO  - 10.11648/j.ajomis.20170204.12
T2  - American Journal of Operations Management and Information Systems
JF  - American Journal of Operations Management and Information Systems
JO  - American Journal of Operations Management and Information Systems
SP  - 92
EP  - 96
PB  - Science Publishing Group
SN  - 2578-8310
UR  - https://doi.org/10.11648/j.ajomis.20170204.12
AB  - The study was conducted to check whether the growth and profitability is the major indicator of bank’s best dividend policy. The research was conducted in the banking sector of Pakistan. The commercial banks working in Pakistan was taken as a sample of the study. On the basis of the dividend payment, 20 banks were selected for the data collection. The data was collected from 2008 to 2014. Bank size and leverage was taken as control variables. As per the results of chow test’s, fixed effect in case of profitability & pooled OLS in case of growth is appropriate for the data analysis. White’s test shows that the data is heteroskedastic so the final results were analyzed by fixed effect model with robust and no issue of heteroskedasticity in growth data. As per the results of fixed effect model; 1) DPO has negative and insignificant effects on bank dividend policy (null accepted); 2) Firm size has positive and significant effects on bank dividend policy; 3) Leverage has negative and significant effects on dividend policy; As per the results of pooled OLS for growth; 1) DPO has positive and significant effects on bank dividend policy (Alternate accepted); 2) Firm size has positive and significant effects on bank dividend policy; 3) Leverage has negative and insignificant effects on dividend policy.
VL  - 2
IS  - 4
ER  -

Copy | Download

Author Information

Yasir Khan

Department of Management Sciences, Qurtuba University of Science and Information Technology, Peshawar, Pakistan
Liaqat Ali

Department of Management Sciences, Qurtuba University of Science and Information Technology, Peshawar, Pakistan
Saima Batool

Department of Management Sciences, Qurtuba University of Science and Information Technology, Peshawar, Pakistan
Azmat Ali

Department of Management Sciences, Qurtuba University of Science and Information Technology, Peshawar, Pakistan

Download PDF

Sections

Plain Text BibTeX RIS

APA Style

Yasir Khan, Liaqat Ali, Saima Batool, Azmat Ali. (2017). Growth & Profitability of Private Commercial Banks: Major Indicator of Its Dividend Policy. American Journal of Operations Management and Information Systems, 2(4), 92-96. https://doi.org/10.11648/j.ajomis.20170204.12

Copy | Download

ACS Style

Yasir Khan; Liaqat Ali; Saima Batool; Azmat Ali. Growth & Profitability of Private Commercial Banks: Major Indicator of Its Dividend Policy. Am. J. Oper. Manag. Inf. Syst. 2017, 2(4), 92-96. doi: 10.11648/j.ajomis.20170204.12

Copy | Download

AMA Style

Yasir Khan, Liaqat Ali, Saima Batool, Azmat Ali. Growth & Profitability of Private Commercial Banks: Major Indicator of Its Dividend Policy. Am J Oper Manag Inf Syst. 2017;2(4):92-96. doi: 10.11648/j.ajomis.20170204.12

Copy | Download

@article{10.11648/j.ajomis.20170204.12,
  author = {Yasir Khan and Liaqat Ali and Saima Batool and Azmat Ali},
  title = {Growth & Profitability of Private Commercial Banks: Major Indicator of Its Dividend Policy},
  journal = {American Journal of Operations Management and Information Systems},
  volume = {2},
  number = {4},
  pages = {92-96},
  doi = {10.11648/j.ajomis.20170204.12},
  url = {https://doi.org/10.11648/j.ajomis.20170204.12},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ajomis.20170204.12},
  abstract = {The study was conducted to check whether the growth and profitability is the major indicator of bank’s best dividend policy. The research was conducted in the banking sector of Pakistan. The commercial banks working in Pakistan was taken as a sample of the study. On the basis of the dividend payment, 20 banks were selected for the data collection. The data was collected from 2008 to 2014. Bank size and leverage was taken as control variables. As per the results of chow test’s, fixed effect in case of profitability & pooled OLS in case of growth is appropriate for the data analysis. White’s test shows that the data is heteroskedastic so the final results were analyzed by fixed effect model with robust and no issue of heteroskedasticity in growth data. As per the results of fixed effect model; 1) DPO has negative and insignificant effects on bank dividend policy (null accepted); 2) Firm size has positive and significant effects on bank dividend policy; 3) Leverage has negative and significant effects on dividend policy; As per the results of pooled OLS for growth; 1) DPO has positive and significant effects on bank dividend policy (Alternate accepted); 2) Firm size has positive and significant effects on bank dividend policy; 3) Leverage has negative and insignificant effects on dividend policy.},
 year = {2017}
}

Copy | Download

TY  - JOUR
T1  - Growth & Profitability of Private Commercial Banks: Major Indicator of Its Dividend Policy
AU  - Yasir Khan
AU  - Liaqat Ali
AU  - Saima Batool
AU  - Azmat Ali
Y1  - 2017/10/26
PY  - 2017
N1  - https://doi.org/10.11648/j.ajomis.20170204.12
DO  - 10.11648/j.ajomis.20170204.12
T2  - American Journal of Operations Management and Information Systems
JF  - American Journal of Operations Management and Information Systems
JO  - American Journal of Operations Management and Information Systems
SP  - 92
EP  - 96
PB  - Science Publishing Group
SN  - 2578-8310
UR  - https://doi.org/10.11648/j.ajomis.20170204.12
AB  - The study was conducted to check whether the growth and profitability is the major indicator of bank’s best dividend policy. The research was conducted in the banking sector of Pakistan. The commercial banks working in Pakistan was taken as a sample of the study. On the basis of the dividend payment, 20 banks were selected for the data collection. The data was collected from 2008 to 2014. Bank size and leverage was taken as control variables. As per the results of chow test’s, fixed effect in case of profitability & pooled OLS in case of growth is appropriate for the data analysis. White’s test shows that the data is heteroskedastic so the final results were analyzed by fixed effect model with robust and no issue of heteroskedasticity in growth data. As per the results of fixed effect model; 1) DPO has negative and insignificant effects on bank dividend policy (null accepted); 2) Firm size has positive and significant effects on bank dividend policy; 3) Leverage has negative and significant effects on dividend policy; As per the results of pooled OLS for growth; 1) DPO has positive and significant effects on bank dividend policy (Alternate accepted); 2) Firm size has positive and significant effects on bank dividend policy; 3) Leverage has negative and insignificant effects on dividend policy.
VL  - 2
IS  - 4
ER  -

Copy | Download