| Title : | The impact of growth prospects, size and leverage on dividend behavior of Nepalese commercial banks | | Material Type: | printed text | | Authors: | Rabindra Rajbhandari, Author | | Publication Date: | 2016 | | Pagination: | 118p. | | Size: | GRP/Thesis | | Accompanying material: | 7/B | | Languages : | English | | Descriptors: | Economic history
| | Class number: | 338.971 | | Abstract: | Dividends are payment made by the company to a shareholder usually after a company earns profit. Since, dividends are money divided to shareholders after profit; it is not considered a business expense but a sharing of recognized asset among the shareholders. Firms view dividend policy very important because it determines what funds flow to investors and what funds are retained by the firm for reinvestment. Shareholders always look at the capability of the companies to initiate a dividend. Dividend payout has potential implications for share prices and hence returns to investors, the financing of internal growth and the equity base through retentions together with its gearing and leverage (Omran and Pointon, 2004). Brealey et al. (2012) had listed dividends as one of the 10 unresolved problems in finance. Many reasons exist why companies should pay or not to pay dividends. Yet figuring out why companies pay dividends and investors pay attention to dividend, that is the “dividend puzzle”, is still problematic. Therefore, dividend policy has become one of the most complicated and important financial decisions that corporate manager encounter (Baker, Veit, and Powell, 2001).
The major purpose of this study is to analyze the impact of growth prospects, size and leverage upon the dividend policies of Nepalese commercial banks. The specific objectives are (a) to analyze the dividend behavior of Nepalese commercial banks, (b) to assess the structure and patterns of dividend per share, dividend yield, dividend payout ratio, growth prospects, size, leverage, profitability, risk, past dividends and inflation in Nepalese commercial banks, (c) to identify the impact of other variables like profitability, past dividends, risk and inflation on the dividend behavior, (d) to examine whether dividend policies of Nepalese banks follow any particular dividend theory.
This study is based on descriptive and causal-comparative research designs. The descriptive research design has been adopted to undertake fact-finding operation searching for adequate information about the impact of growth prospect, leverage, size and other variables on the dividend policy of Nepalese commercial banks. Moreover, this study also emphasizes on cause and effect relationship between dividend determining factors and the dividend payout of commercial banks in Nepalese context. This study is based on the cross sectional secondary data which are gathered from 19 commercial banks in Nepal. The total numbers of observations is 146. The main sources of data are supervision reports of NRB and various annual reports of different commercial banks along with the publications of the World Bank. The data are collected for dividend per share, dividend yield, dividend payout ratio, growth prospect, size, leverage, return on assets, lagged dividends, price earnings ratio and inflation. These data are collected for the period 2006- 2014
The results shows that dividend payout in Nepalese commercial banks has a negative association with growth prospects, leverage, P/E ratio and inflation while positive correlation with size, profitability and past dividends. The results reveal that the beta coefficient of growth prospects is negative and significant for all dividend variables which imply that higher growth prospects result in lower dividend payout of the Nepalese commercial banks. The beta coefficients for size are positive for all the proxy of dividend patterns. It means that larger the size of the banks, larger would be the dividend payout of the banks. The study also shows that leverage has a negative beta coefficient which implies that higher debt would lower the dividend payments of the banks. Higher profitability leads to higher dividend payout of the banks as shown by the results as the beta coefficient of ROA is positive and significant. Lagged dividends are positively related to the dividend which means that higher dividend will be paid by the banks with higher past dividends. Price earnings ratio has negative beta coefficient for all the proxy of dividend behavior. It implies that higher the P/E ratio of the commercial banks, lower would be the dividend payment. The beta coefficient of the annual inflation is negative for dividend per share and dividend payout ratio while it is positive with the dividend yield. None of the beta coefficients here is significant.
The major conclusion of the study is that growth prospects, leverage and size which are the major variables taken in the study has a major impact upon the dividend behavior of the commercial banks of Nepal. Moreover, along with the mentioned variables, profitability, lagged dividends and P/E ratio are also the variables having crucial impact on dividend policy. Growth prospects, leverage and P/E ratio are the variables that affect the dividend behavior of Nepalese commercial negatively and significantly. In contrast, the variables, size, profitability and past dividends also have a significant positive impact on the dividend policy of the Nepalese commercial banks. Inflation has no specified impact upon the dividend policy as a whole.
Finally, as shown by the Lintner in 1956, the future dividends of a firm depend on current earnings and past dividends. The results are in accordance to the principle forwarded by Lintner. Therefore, it can be concluded from this study that the basic dividend behavior of Nepalese commercial banks follow Lintner model of dividends.
|
The impact of growth prospects, size and leverage on dividend behavior of Nepalese commercial banks [printed text] / Rabindra Rajbhandari, Author . - 2016 . - 118p. ; GRP/Thesis + 7/B. Languages : English | Descriptors: | Economic history
| | Class number: | 338.971 | | Abstract: | Dividends are payment made by the company to a shareholder usually after a company earns profit. Since, dividends are money divided to shareholders after profit; it is not considered a business expense but a sharing of recognized asset among the shareholders. Firms view dividend policy very important because it determines what funds flow to investors and what funds are retained by the firm for reinvestment. Shareholders always look at the capability of the companies to initiate a dividend. Dividend payout has potential implications for share prices and hence returns to investors, the financing of internal growth and the equity base through retentions together with its gearing and leverage (Omran and Pointon, 2004). Brealey et al. (2012) had listed dividends as one of the 10 unresolved problems in finance. Many reasons exist why companies should pay or not to pay dividends. Yet figuring out why companies pay dividends and investors pay attention to dividend, that is the “dividend puzzle”, is still problematic. Therefore, dividend policy has become one of the most complicated and important financial decisions that corporate manager encounter (Baker, Veit, and Powell, 2001).
The major purpose of this study is to analyze the impact of growth prospects, size and leverage upon the dividend policies of Nepalese commercial banks. The specific objectives are (a) to analyze the dividend behavior of Nepalese commercial banks, (b) to assess the structure and patterns of dividend per share, dividend yield, dividend payout ratio, growth prospects, size, leverage, profitability, risk, past dividends and inflation in Nepalese commercial banks, (c) to identify the impact of other variables like profitability, past dividends, risk and inflation on the dividend behavior, (d) to examine whether dividend policies of Nepalese banks follow any particular dividend theory.
This study is based on descriptive and causal-comparative research designs. The descriptive research design has been adopted to undertake fact-finding operation searching for adequate information about the impact of growth prospect, leverage, size and other variables on the dividend policy of Nepalese commercial banks. Moreover, this study also emphasizes on cause and effect relationship between dividend determining factors and the dividend payout of commercial banks in Nepalese context. This study is based on the cross sectional secondary data which are gathered from 19 commercial banks in Nepal. The total numbers of observations is 146. The main sources of data are supervision reports of NRB and various annual reports of different commercial banks along with the publications of the World Bank. The data are collected for dividend per share, dividend yield, dividend payout ratio, growth prospect, size, leverage, return on assets, lagged dividends, price earnings ratio and inflation. These data are collected for the period 2006- 2014
The results shows that dividend payout in Nepalese commercial banks has a negative association with growth prospects, leverage, P/E ratio and inflation while positive correlation with size, profitability and past dividends. The results reveal that the beta coefficient of growth prospects is negative and significant for all dividend variables which imply that higher growth prospects result in lower dividend payout of the Nepalese commercial banks. The beta coefficients for size are positive for all the proxy of dividend patterns. It means that larger the size of the banks, larger would be the dividend payout of the banks. The study also shows that leverage has a negative beta coefficient which implies that higher debt would lower the dividend payments of the banks. Higher profitability leads to higher dividend payout of the banks as shown by the results as the beta coefficient of ROA is positive and significant. Lagged dividends are positively related to the dividend which means that higher dividend will be paid by the banks with higher past dividends. Price earnings ratio has negative beta coefficient for all the proxy of dividend behavior. It implies that higher the P/E ratio of the commercial banks, lower would be the dividend payment. The beta coefficient of the annual inflation is negative for dividend per share and dividend payout ratio while it is positive with the dividend yield. None of the beta coefficients here is significant.
The major conclusion of the study is that growth prospects, leverage and size which are the major variables taken in the study has a major impact upon the dividend behavior of the commercial banks of Nepal. Moreover, along with the mentioned variables, profitability, lagged dividends and P/E ratio are also the variables having crucial impact on dividend policy. Growth prospects, leverage and P/E ratio are the variables that affect the dividend behavior of Nepalese commercial negatively and significantly. In contrast, the variables, size, profitability and past dividends also have a significant positive impact on the dividend policy of the Nepalese commercial banks. Inflation has no specified impact upon the dividend policy as a whole.
Finally, as shown by the Lintner in 1956, the future dividends of a firm depend on current earnings and past dividends. The results are in accordance to the principle forwarded by Lintner. Therefore, it can be concluded from this study that the basic dividend behavior of Nepalese commercial banks follow Lintner model of dividends.
|
|
338 Micro-économie : activités et comportements économiques des individus, consommation
Refine your search Apply to external sourcesImpact of leverage,size and profitability on dividend policy of Nepalese commercial banks / Samjhana Poudel
