n “Determinants of Dividend Payout: An Empirical Study on Bank Industry in Ethiopia”

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.