IDEAS home Printed from https://ideas.repec.org/a/pid/journl/v51y2012i4p683-693.html

Monetary Policy Restriction and Dividend Behaviour of Pakistani Firms: An Empirical Analysis

Author

Listed:
  • Muhammad Shahzad Ashraf

    (Shaheed Zulfikar Ali Bhutto Institute of Science and Technology, Islamabad)

  • Hasan M. Mohsin

    (Department of Econometrics and Statistics, Pakistan Institute of Development Economics, Islamabad.)

Abstract

Studies upon impact of macro variables on firm’s dividend policy are very limited and specifically rare in Pakistan perspective. Main purpose of this research paper is to observe impact of restricted monetary policy on dividend behaviour of Pakistani firms. During restricted monetary policy, cost of external funds increases and firms prefer to utilise internal funds leading to reduction in dividend payout. Behaviour of 100 listed firms, selected purposefully, has been observed for the period from 2001 to 2009 by using Lintner’ modified model. During the research period of nine years, monetary policy has been gone through both loose and tight phases. Proposed model is dynamic one as lagged dependent variable has been used as explanatory variable. Results of the all three estimations reveal almost same results. First lagged dividend has been proved to be most deterministic factor of dividend policy followed by current earnings. Monetary policy and lagged dividends interactive variables provide mixed results. First interactive variable has negative coefficients in all three, fixed effect, random effects and GMM, models but with insignificant p-values. Second monetary policy interactive variable has positive coefficients with significant values in random effects and GMM model. Firms seem to follow relatively stable dividend policies with lower adjustment factor. Monetary policy has not been observed as significant determinant of dividend policy of Pakistani firms according to dynamic GMM model.

Suggested Citation

  • Muhammad Shahzad Ashraf & Hasan M. Mohsin, 2012. "Monetary Policy Restriction and Dividend Behaviour of Pakistani Firms: An Empirical Analysis," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 51(4), pages 683-693.
    • Handle: RePEc:pid:journl:v:51:y:2012:i:4:p:683-693
    as

    Download full text from publisher

    File URL: http://www.pide.org.pk/pdf/PDR/2012/Volume4/683-693.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Strike Mbulawa & Francis Nathan Okurut & Mogale Ntsosa & Narain Sinha, 2020. "Dynamics of Corporate Dividend Policy under Hyperinflation and Dollarization: A Quantile Regression Approach," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Democritus University of Thrace (DUTH), Kavala Campus, Greece, vol. 13(3), pages 70-82, December.
    2. 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.

    More about this item

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • N2 - Economic History - - Financial Markets and Institutions

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pid:journl:v:51:y:2012:i:4:p:683-693. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Khurram Iqbal (email available below). General contact details of provider: https://edirc.repec.org/data/pideipk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.