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Determinants of dividend policy: a study of the Indian banking sector

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  • Sangeeta D. Misra

Abstract

This study attempts to analyse the factors which influence the dividend policy of Indian banking firms. Using panel data pertaining to 121 Indian banks, two regression models have been proposed, one showing dividend payout ratio and the other showing dividend rate as a dependent variable. The study considers both bank specific internal variables as well as macroeconomic variables as explanatory variables influencing the dividend policy of Indian banks. The results of the determinants of dividend payout ratio of Indian banks show growth rate of real GDP affecting dividend payout ratio positively and significantly, and also show return on assets and total deposits to total assets ratio of Indian banks affecting their payout ratio negatively and significantly. The results of the determinants of dividend rate show no variable emerging as a significant determinant, indicating the fact that Indian banks consider dividend payout ratio to be a better measure of their dividend policy.

Suggested Citation

  • Sangeeta D. Misra, 2015. "Determinants of dividend policy: a study of the Indian banking sector," International Journal of Indian Culture and Business Management, Inderscience Enterprises Ltd, vol. 11(4), pages 440-456.
    • Handle: RePEc:ids:ijicbm:v:11:y:2015:i:4:p:440-456
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