Determinants of Dividend Payout: Evidence from Ethiopian Private Banks
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Date
2018-12
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Addis Ababa University
Abstract
Identifying and explaining factors that influence dividend payout is one of the most debated
issues among various academicians and policy makers alike. This study examined determinants
of dividend payout in Ethiopian Private Banks. We used dividend payout ratio as outcome
variable and profitability, liquidity, leverage, previous year dividend, company age and GDP
growth rate as explanatory variables. The study used secondary data of six private banks for the
period from 2010/11 to 2015/16 analyzed with pooled ordinary least square (POLS) regression
model. The results of the study show profitability and company age significantly and negatively
influence the outcome variable. The study also shows previous year dividend, leverage and GDP
growth rate positively and significantly affect the response variable. The other input variable
liquidity was found to be insignificant in shaping the behavior of dividend payout. The results of
the study show the existing dividend theories do not exhaustively explain dividend payout in
Ethiopian Private Banks. The findings of this research recommends investors and bank officials to
consider bank’s profitability, leverage, previous year dividend, company age and GDP growth rate
when they make investment and dividend payout decisions
Description
A Thesis Submitted to School of Graduate Studies of Addis
Ababa University in partial fulfillment of requirements for
the degree of Master of Business Administration (MBA) in
Management
Keywords
Company Age, Dividend Payout Ratio, Ethiopian Private Banks, GDP Growth Rate