Examining bank-specific determinants of the dividend payout ratio of Sub-Saharan Africa banks: the panel GMM approach Online publication date: Thu, 13-Dec-2018
by Odunayo Magret Olarewaju; Stephen Oseko Migiro; Mabutho Sibanda
Afro-Asian J. of Finance and Accounting (AAJFA), Vol. 9, No. 1, 2019
Abstract: Dividend payout policy of banks has been the commonest dividend policy in commercial banks world-wide owing to the assumption that it will minimise agency costs in the banks. Hence, this study adopts the dynamic panel two-step system and differenced GMM in analysing the data of 250 commercial banks from 30 countries in Sub-Saharan Africa (SSA) for the period 2006 to 2015 to examine the determinants of the dividend payout ratio of these banks. The empirical results reveal that past year dividend is the most significant determinant of current year dividend. Taxation and capital adequacy ratio, which are the legal and regulatory factors considered, are found to be insignificant. Our findings reveal earnings-after-tax and leverage as being significant determinants of payout ratio in SSA banks. Hence, Lintner's model holds in SSA banks as a region and it is, therefore, recommended that it must be strictly followed in setting the dividend process of commercial banks in SSA.
Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.Complimentary Subscribers, Editors or Members of the Editorial Board of the Afro-Asian J. of Finance and Accounting (AAJFA):
Login with your Inderscience username and password:
Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.
If you still need assistance, please email subs@inderscience.com
Our Blog 
Follow us on Twitter 
Visit us on Facebook