| Title : | Impact of leverage,size and profitability on dividend policy of Nepalese commercial banks | | Material Type: | printed text | | Authors: | Samjhana Poudel, Author | | Publication Date: | 2018 | | Pagination: | 92p. | | Size: | GRP/Thesis | | Accompanying material: | 12/D | | Languages : | English | | Descriptors: | Economic history
| | Class number: | 338.971 | | Abstract: | Financial institutions are important for achieving the basic objective of a country's economic and social progress. Dividend policy is the key decision area in the field of corporate financial management. Firms view dividend policy very important because it determines what funds flow to investors and what funds are retained by the firm for reinvestment. Dividend is the return from investment in equity shares. Shareholders always look at the capability of the companies to initiate a dividend. Financial managers are generally supposed to take different important decisions like investment portfolios, product development, and financing with the objective to increase market value of the firm (Afza and Mirza, 2011). Dividend is a considerable theme in financial studies that affects the value of the firm’s common stock in the market place and remains as a controversial area in the financial management. 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. Dividend decision is a major financial decision in the sense that a firm has to choose between distributing profits to the shareholders and plough back them into the business. The name “bird in hand” theory argued that there exists positive relationship between company values and dividends (Linter, 1956).
This study attempts to examine the impact of size, leverage and profitability on dividend policy of Nepalese commercial banks. The study is based on secondary data of 18 commercial banks with 162 observations for the period of 2008/09 to 2016/17. Data and information have been collected from Banking and Financial Statistics of NRB and annual reports of the selected commercial banks. The data are collected for dividend per share, dividend payout ratio, size, leverage, return on equity, inflation rate, liquidity, and age of the firm. The research design adopted in this study is descriptive and causal comparative research design.
The result shows that the average dividend payout ratio is highest for NIBL (88.86 percent) and lowest for ADBL (9.53 percent). The average dividend per share is highest for SCB (Rs.38.04 per share) and lowest for SABL (Rs 5.18 per share). It has been found that dividend per share has fluctuated in the majority of the selected commercial banks during the study period.Likewise, the average return on equity is highest for NABIL (Rs 43.86 per share) and lowest for SRBL (Rs 9.64 per share). The earnings per share is highest for EBL (Rs. 84 .93 per share) and lowest for MBL (Rs 7.94). It has been found that average earnings per share trend is more consistent over a period of time. The average bank size is highest for NABIL with Rs.86.83 billion and lowest for SABL (Rs. 14.11 billion). The average bank size for all types of banks is increasing over the study period. The average liquidity is highest for NABIL (80.15 percentage) and lowest for SABL (14.21 percentage).
The descriptive statistics for commercial banks shows that the average dividend per share, dividend payout ratio, bank size, liquidity, age, leverage, inflation rate, ROE and EPS are Rs 17.97 per share, 63.41 percent, Rs 47.49 billion, 14.40 percent, 17 years, 9.63 percent, 0.04 percent 21.16 percent and Rs 35.41 per share. The study shows that bank size and age of the firm have positive relationship with dividend payout ratio and dividend per share respectively. However, liquidity and inflation rate have negative relationship with dividend payout ratio and dividend per share respectively. The study reveal that the beta coefficient for bank size and age of the year are positive with dividend payout ratio and dividend per share. It indicates that larger the bank size, higher would be the dividend payout ratio and dividend per share. However, the beta coefficients are significant for liquidity, age, leverage and EPS. Similarly, the results found that liquidity, leverage and inflation rate have negative impact on dividend payout ratio and dividend per share.
The study shows that bank size, age of the firm, return on equity and earnings per share have positive and significant impact on dividend per share and dividend payout ratio. However, leverage, inflation rate and liquidity ratio have negative impact on dividend per share and dividend payout ratio. The study concludes that profitability and bank size have significant impact on dividend policy of the firm. The study also concludes that bank size followed by leverage ratio and earnings per share is the most influencing factor that determines the dividend policy of Nepalese commercial banks
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Impact of leverage,size and profitability on dividend policy of Nepalese commercial banks [printed text] / Samjhana Poudel, Author . - 2018 . - 92p. ; GRP/Thesis + 12/D. Languages : English | Descriptors: | Economic history
| | Class number: | 338.971 | | Abstract: | Financial institutions are important for achieving the basic objective of a country's economic and social progress. Dividend policy is the key decision area in the field of corporate financial management. Firms view dividend policy very important because it determines what funds flow to investors and what funds are retained by the firm for reinvestment. Dividend is the return from investment in equity shares. Shareholders always look at the capability of the companies to initiate a dividend. Financial managers are generally supposed to take different important decisions like investment portfolios, product development, and financing with the objective to increase market value of the firm (Afza and Mirza, 2011). Dividend is a considerable theme in financial studies that affects the value of the firm’s common stock in the market place and remains as a controversial area in the financial management. 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. Dividend decision is a major financial decision in the sense that a firm has to choose between distributing profits to the shareholders and plough back them into the business. The name “bird in hand” theory argued that there exists positive relationship between company values and dividends (Linter, 1956).
This study attempts to examine the impact of size, leverage and profitability on dividend policy of Nepalese commercial banks. The study is based on secondary data of 18 commercial banks with 162 observations for the period of 2008/09 to 2016/17. Data and information have been collected from Banking and Financial Statistics of NRB and annual reports of the selected commercial banks. The data are collected for dividend per share, dividend payout ratio, size, leverage, return on equity, inflation rate, liquidity, and age of the firm. The research design adopted in this study is descriptive and causal comparative research design.
The result shows that the average dividend payout ratio is highest for NIBL (88.86 percent) and lowest for ADBL (9.53 percent). The average dividend per share is highest for SCB (Rs.38.04 per share) and lowest for SABL (Rs 5.18 per share). It has been found that dividend per share has fluctuated in the majority of the selected commercial banks during the study period.Likewise, the average return on equity is highest for NABIL (Rs 43.86 per share) and lowest for SRBL (Rs 9.64 per share). The earnings per share is highest for EBL (Rs. 84 .93 per share) and lowest for MBL (Rs 7.94). It has been found that average earnings per share trend is more consistent over a period of time. The average bank size is highest for NABIL with Rs.86.83 billion and lowest for SABL (Rs. 14.11 billion). The average bank size for all types of banks is increasing over the study period. The average liquidity is highest for NABIL (80.15 percentage) and lowest for SABL (14.21 percentage).
The descriptive statistics for commercial banks shows that the average dividend per share, dividend payout ratio, bank size, liquidity, age, leverage, inflation rate, ROE and EPS are Rs 17.97 per share, 63.41 percent, Rs 47.49 billion, 14.40 percent, 17 years, 9.63 percent, 0.04 percent 21.16 percent and Rs 35.41 per share. The study shows that bank size and age of the firm have positive relationship with dividend payout ratio and dividend per share respectively. However, liquidity and inflation rate have negative relationship with dividend payout ratio and dividend per share respectively. The study reveal that the beta coefficient for bank size and age of the year are positive with dividend payout ratio and dividend per share. It indicates that larger the bank size, higher would be the dividend payout ratio and dividend per share. However, the beta coefficients are significant for liquidity, age, leverage and EPS. Similarly, the results found that liquidity, leverage and inflation rate have negative impact on dividend payout ratio and dividend per share.
The study shows that bank size, age of the firm, return on equity and earnings per share have positive and significant impact on dividend per share and dividend payout ratio. However, leverage, inflation rate and liquidity ratio have negative impact on dividend per share and dividend payout ratio. The study concludes that profitability and bank size have significant impact on dividend policy of the firm. The study also concludes that bank size followed by leverage ratio and earnings per share is the most influencing factor that determines the dividend policy of Nepalese commercial banks
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