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Determinants of Dividend Policy in Indian Banks: An Empirical Analysis

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  • M Sudhahar
  • T Saroja

Abstract

This study analyzes the trends and determinants of the dividend policy of banks in India. The banks which are actively traded under Bombay Stock Exchange (BSE) A and B Groups are considered as sample for the study. A multiple regression model, in addition to Lintner model, extended version of Lintner model, such as Brittain’s cash flow model, Brittain’s explicit depreciation model and Darling’s model, have been used for testing the independent variables. The period of study is for ten years, from 1997-98 to 2006-07. Brittain’s explicit depreciation model is found to be the best model in explaining the dividend policy of the banks. In other words, the last year divided followed by current year depreciation and current year profit after tax play a positive role in the dividend policy for the current year among Indian banks.

Suggested Citation

  • M Sudhahar & T Saroja, 2010. "Determinants of Dividend Policy in Indian Banks: An Empirical Analysis," The IUP Journal of Bank Management, IUP Publications, vol. 0(3), pages 63-75, August.
  • Handle: RePEc:icf:icfjbm:v:9:y:2010:i:3:p:63-75
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    Cited by:

    1. Fernau, Erik & Hirsch, Stefan, 2019. "What drives dividend smoothing? A meta regression analysis of the Lintner model," International Review of Financial Analysis, Elsevier, vol. 61(C), pages 255-273.
    2. Urszula Mrzyglod & Sabina Nowak & Magdalena Mosionek-Schweda & Jakub M. Kwiatkowski, 2021. "What drives the dividend decisions in BRICS countries?," Oeconomia Copernicana, Institute of Economic Research, vol. 12(3), pages 593-629, September.

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