Abstract:
The purpose of this study was to assess the determinants of dividend payout of
Ethiopian private bank under the study period covering from 2013 to 2022. An
explanatory research design, which involved quantitative and qualitative
research approach, was employed. Ten years Panel data was obtained from
audited financial statements of fourteen selected private banks in Ethiopia. In
addition to this, key informant interview was also made from higher officials of
banks to compare with the quantitative regression result. Both descriptive and
inferential statistics were used in order to analyze the collected data. Fixed effect
model regression was used to investigate the impact of determinant factors on
the dividend payout of private banks in Ethiopia. Accordingly, explanatory
variables that are incorporated in this study profitability, and liquidity were
positively and significantly influenced dividend payout of private banks in
Ethiopia. On the other hand, growth and leverage were negatively and
significantly affected dividend payout of private banks in Ethiopia. However
firm size is not a significant factor for dividend payout of private commercial
banks in Ethiopia. Therefore, the major determinants of dividend payout of
private commercial banks in Ethiopia are profitability, liquidity, growth, and
leverage. It is recommended that private banks should make an investment in
profitable venture to earn higher profit and to pay a better dividend for their
shareholders and maintain their liquidity position in order to be enough to pay
higher dividend for their shareholders.
