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Dynamics of Lintner’s Model in the Dividend Payment Process of Nigerian Banks

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  • Odunayo Magret Olarewaju

    (School of Accounting Economics and Finance, University of KwaZulu- Natal, South Africa.)

  • Mabutho Sibanda

    (School of Accounting Economics and Finance, University of KwaZulu- Natal, South Africa.)

  • Stephen Oseko Migiro

    (Graduate School of Business and Leadership, University of KwaZulu-Natal, Westville Campus, South Africa.)

Abstract

This study examines the dynamics of Lintner’s model using bank-specific panel data from 15 commercial banks listed on the Nigerian Stock Exchange, using the newly introduced dynamic Panel-Auto Regressive Distributed Lag technique for the Period 2006Q01 to 2015Q04. The study findings from the long-run estimates reveal that Lintner’s model holds well, but with a negative effect of profitability on dividend payout of banks in Nigeria during the period in question. The findings further reveal evidence of a co-integrating relationship among past year dividend, profitability, capital adequacy and taxation, and with evidence of unidirectional short-run causality among the variables used to test Lintner’s model and the dividend payout ratio. Based on these findings, this study concludes that dividend process in Nigeria support the information-content-hypothesis’ argument by strict adherence to Lintner’s model in Nigerian banking sector.

Suggested Citation

  • Odunayo Magret Olarewaju & Mabutho Sibanda & Stephen Oseko Migiro, 2017. "Dynamics of Lintner’s Model in the Dividend Payment Process of Nigerian Banks," SPOUDAI Journal of Economics and Business, SPOUDAI Journal of Economics and Business, University of Piraeus, vol. 67(3), pages 79-94, july-Sept.
    • Handle: RePEc:spd:journl:v:67:y:2017:i:3:p:79-94
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    More about this item

    Keywords

    Dynamics of Lintner’s model; Nigerian banking sector; dividend policy; Panel-ARDL;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy

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