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How Does Capital Structure Influence the Dividend Policy? A Comparative study of both Commercial and Islamic Banks: A Time Series Analysis (2006-2021)

Author

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  • Faheem ul Hussain Dehraj

    (Lecturer, Department of Business Administration, Shaheed Benazir Bhutto University Campus Naushahro Feroze, Pakistan)

  • Mukhtiar Ali Erri

    (Lecturer, Department of Business Administration, Shaheed Benazir Bhutto University, Shaheed Benazir Abad, Sindh, Pakistan)

  • Feroz Khan Laghari

    (Institute of Business Administration, University of Sindh, Jamshoro, Sindh 76080, Pakistan)

  • Muhammad Fahad

    (MS Finance Scholar, Institute of Business Management Sciences, University of Agriculture, Faisalabad, Pakistan)

  • Muhammad Ibrahim Tiwano

    (Institute of Business Administration, University of Sindh, Jamshoro, Sindh 76080, Pakistan,)

Abstract

The impact of the capital structure on the dividend policy is discussed in this study. Keeping in view the both commercial and Islamic banks of Pakistan. Using the secondary panel data from the time 2006 to 2021 was compilled from the State Bank of Pakistan yearly published reports. Those are available on its official website. Therefore the two separate regression models have been developed to ensure the dividend payout policy. For analyzing the data, the SPSS latest version 26 have been used. But before analyzing the regression model, some assumptions for the normality of the data were checked. Keepin in view the results of the skewness and kolmogorov-smirnov level of significance. Thereafter the empirical analysis further begun to check the normality of financial data through variance inflation factors (VIF). Finally the results of our models show of the both banking industries that the dividend payouts positively and significantly are determined by size, profitability, and deposits. Since the Investment opportunities from both banking sectors didn't explain the significant association with dividend payments. Also the institutional borrowing of both sectors having negative coefficients sign. This mean based on their respective negative coefficients -.004 and -.040 which separately indicate that the One unit increasing in institutional borrowing will decrease respectively .004 and .040 units in dividend payout by the both conventional and Islamic banks.

Suggested Citation

  • Faheem ul Hussain Dehraj & Mukhtiar Ali Erri & Feroz Khan Laghari & Muhammad Fahad & Muhammad Ibrahim Tiwano, 2024. "How Does Capital Structure Influence the Dividend Policy? A Comparative study of both Commercial and Islamic Banks: A Time Series Analysis (2006-2021)," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 13(1), pages 391-397.
    • Handle: RePEc:rfh:bbejor:v:13:y:2024:i:1:p:391-397
    DOI: https://doi.org/10.61506/01.00220
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    References listed on IDEAS

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