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Product Market Competition, Regulation and Dividend Payout Policy of Malaysian Banks

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  • Ameer, Rashid

Abstract

This paper investigates the impact of the product market competition, regulations on the dividend policies of We find significant differences in the payout of the banks categorized as selling a non-interest based banking products and mix of both interest and non-interest based banking products. We find that the decision to increase dividends is significantly related to earnings, and the decision to cut dividend is significantly related to the changes in the non-performing loans, corporate and real estate sectors loans ratio and earnings loses. Research findings have implication for the regulators of the banks. The research provides a clear link between banks' portfolio choice and earnings that have implications for the dividends in the emerging markets.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 8579.

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Date of creation: 2007
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Handle: RePEc:pra:mprapa:8579

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Keywords: Dividends; Banks; Non-performing loans; Ordered Probit Model; Malaysia;

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References

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  1. Kopecky, Kenneth J. & VanHoose, David, 2004. "Bank capital requirements and the monetary transmission mechanism," Journal of Macroeconomics, Elsevier, vol. 26(3), pages 443-464, September.
  2. Franklin Allen & Antonio Bernardo & Ivo Welch, . "A Theory of Dividends Based on Tax Clienteles," Rodney L. White Center for Financial Research Working Papers 15-98, Wharton School Rodney L. White Center for Financial Research.
  3. Malcolm Baker & Jeffrey Wurgler, 2003. "A Catering Theory of Dividends," NBER Working Papers 9542, National Bureau of Economic Research, Inc.
  4. Hülsewig, Oliver & Mayer, Eric & Wollmershäuser, Timo, 2004. "Bank Loan Supply and Monetary Policy Transmission in Germany: An Assessment based on Matching Impulse Responses," W.E.P. - Würzburg Economic Papers 54, University of Würzburg, Chair for Monetary Policy and International Economics.
  5. N. Bhattacharyya, 2007. "Dividend policy: a review," Managerial Finance, Emerald Group Publishing, vol. 33(1), pages 4-13.
  6. Robert Marquez, 2002. "Competition, Adverse Selection, and Information Dispersion in the Banking Industry," Review of Financial Studies, Society for Financial Studies, vol. 15(3), pages 901-926.
  7. Casey, K. Michael & Dickens, Ross N., 2000. "The effects of tax and regulatory changes on commercial bank dividend policy," The Quarterly Review of Economics and Finance, Elsevier, vol. 40(2), pages 279-293.
  8. Kim, M. & Kristiansen, E.G. & Vale, B., 2001. "Endogenous Product Differentiation in Credit Markets: What do Borrowers Pay for?," Papers 27/2001, Norwegian School of Economics and Business Administration-.
  9. Mateut, Simona & Bougheas, Spiros & Mizen, Paul, 2006. "Trade credit, bank lending and monetary policy transmission," European Economic Review, Elsevier, vol. 50(3), pages 603-629, April.
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  11. Correia da Silva, L. & Goergen, M. & Renneboog, L.D.R., 2002. "When do German Firms Change their Dividends?," Discussion Paper 2002-056, Tilburg University, Center for Economic Research.
  12. Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer & Robert Vishny, 1998. "Agency Problems and Dividend Policies Around the World," NBER Working Papers 6594, National Bureau of Economic Research, Inc.
  13. Mayne, Lucille S., 1980. "Bank Dividend Policy and Holding Company Affiliation," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 15(02), pages 469-480, June.
  14. Hosono, Kaoru, 2006. "The transmission mechanism of monetary policy in Japan: Evidence from banks' balance sheets," Journal of the Japanese and International Economies, Elsevier, vol. 20(3), pages 380-405, September.
  15. Black, Fischer & Scholes, Myron, 1974. "The effects of dividend yield and dividend policy on common stock prices and returns," Journal of Financial Economics, Elsevier, vol. 1(1), pages 1-22, May.
  16. Kopecky, Kenneth J. & VanHoose, David, 2004. "A model of the monetary sector with and without binding capital requirements," Journal of Banking & Finance, Elsevier, vol. 28(3), pages 633-646, March.
  17. Aivazian, Varouj & Booth, Laurence & Cleary, Sean, 2003. "Dividend policy and the organization of capital markets," Journal of Multinational Financial Management, Elsevier, vol. 13(2), pages 101-121, April.
  18. Sufian, F., 2004. "The Eficiency Effects of Bank Mergers and Acquisitions in a Developing Economy: Evidence from Malaysia," International Journal of Applied Econometrics and Quantitative Studies, Euro-American Association of Economic Development, vol. 1(4), pages 53-74.
  19. Varouj Aivazian & Laurence Booth & Sean Cleary, 2003. "Do Emerging Market Firms Follow Different Dividend Policies From U.S. Firms?," Journal of Financial Research, Southern Finance Association & Southwestern Finance Association, vol. 26(3), pages 371-387.
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Cited by:
  1. Mohsin, Hasan M & Ashraf, Muhammad Shahzad, 2011. "Monetary policy restriction and dividend behavior of Pakistani firms: an empirical analysis," MPRA Paper 34052, University Library of Munich, Germany, revised Oct 2011.

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