Determinants of dividend payout of commercial banks in Nepal / Maushmi Vaidhya 

Public ISBD Title : Determinants of dividend payout of commercial banks in Nepal Material Type: printed text Authors: Maushmi Vaidhya, Author Publication Date: 2013 Pagination: 117p. Size: GRP/Thesis Accompanying material: 1/B General note: Including bibliography Languages : English Descriptors: Banks Banks and banking Capital market Commercial banks Dividend policy Dividends Maushmi Vaidhya Payouts Keywords: 'dividends  dividend policy  payouts  commercial banks  banks  Nepal  management  capital market' Class number: 332.632 Abstract: Despite of several empirical evidences, the dividend policy issues are still puzzling and unresolved. Identification of the factors shaping the dividend payouts decisions is crucial for the corporate managers and it is even more crucial in banking sector especially in case of Nepal because most of the investors in the capital market invest in the shares of the banks. So, the empirical relationship between the dividend payouts and its determinants are stated as the research questions followed by the development of the hypotheses. The major objective of this study is to analyze the factors affecting the dividend payout decisions of the commercial bank along with the examination of empirical relationship between them. The review of literatures has shown relationship between various factors such as net profit, size of the firm, ownership structure, tax structure, lag dividends, cash flows, market to book value ratio, leverage ratio, investment opportunities etc. as and the dividend payouts in case of both developed and emerging countries. In addition, net profit, cash flows, leverage ratio, ownership structure, taxes are some of the variables that are found to have significant association with dividend payouts in various context. Based on the reviews, this study has proposed the conceptual framework identifying net profit, cash flows, market to book ratio, size, debt to equity ratio, number of major shareholders and slack as the most important factors affecting the dividend payout ratio of the commercial banks in Nepal. For the purpose of study 18 listed commercial banks dividend into two strata is taken as sample and required data such as dividend payout ratios and other independent variables are collected from various secondary sources for period of 8 years i.e. 2005 to 2012. Stratified sampling method is used to select the sample commercial banks. Primary questionnaire survey is also conducted in order to assess the opinions of bank’s manager on dividend issues. Multiple regression analysis and correlation analysis are used to examine the connection between the dividend payout ratios and the determinants of the dividends. Likewise, portfolio sorted on one way sorts of seven independent variables is also employed to see if the relationship shown by regression and correlation analysis really exists. The results of secondary data analysis shows that net profit, cash flows and size of the banks have strong and significant positive impact on dividend payouts while number of major shareholders significantly affects the dividend payout ratio in negative manner. Likewise, market to book value ratio is negligible in explaining dividends; however, these variables have significant positive impact. In contrast, the study documents that leverage ratio and the slack as insignificant in explaining the variations in dividend payout ratios of commercial banks. In line with the findings of the secondary data, the primary survey reveals net profit and the cash flows as the most important determinants of the dividend payout ratios followed by the number of major shareholders and the size of the banks. The major limitations of this study lies in the fact that this study has excluded some firm specific and macro economic variables that might have influence on dividends. Despite the limitations, the findings may have significant degree of implications for both investors and the bank’s management. So, both groups of these stakeholders are recommended to take account of the determinants identified by this study and their relationship with dividend payout ratios. There is wide scope for future studies in same topic. Future studies can increases the sample size including different class of financial institutions to make the results applicable for the entire banking industry of Nepal. Determinants of dividend payout of commercial banks in Nepal [printed text] / Maushmi Vaidhya, Author . - 2013 . - 117p. ; GRP/Thesis + 1/B. Including bibliography Languages : English Descriptors: Banks Banks and banking Capital market Commercial banks Dividend policy Dividends Maushmi Vaidhya Payouts Keywords: 'dividends  dividend policy  payouts  commercial banks  banks  Nepal  management  capital market' Class number: 332.632 Abstract: Despite of several empirical evidences, the dividend policy issues are still puzzling and unresolved. Identification of the factors shaping the dividend payouts decisions is crucial for the corporate managers and it is even more crucial in banking sector especially in case of Nepal because most of the investors in the capital market invest in the shares of the banks. So, the empirical relationship between the dividend payouts and its determinants are stated as the research questions followed by the development of the hypotheses. The major objective of this study is to analyze the factors affecting the dividend payout decisions of the commercial bank along with the examination of empirical relationship between them. The review of literatures has shown relationship between various factors such as net profit, size of the firm, ownership structure, tax structure, lag dividends, cash flows, market to book value ratio, leverage ratio, investment opportunities etc. as and the dividend payouts in case of both developed and emerging countries. In addition, net profit, cash flows, leverage ratio, ownership structure, taxes are some of the variables that are found to have significant association with dividend payouts in various context. Based on the reviews, this study has proposed the conceptual framework identifying net profit, cash flows, market to book ratio, size, debt to equity ratio, number of major shareholders and slack as the most important factors affecting the dividend payout ratio of the commercial banks in Nepal. For the purpose of study 18 listed commercial banks dividend into two strata is taken as sample and required data such as dividend payout ratios and other independent variables are collected from various secondary sources for period of 8 years i.e. 2005 to 2012. Stratified sampling method is used to select the sample commercial banks. Primary questionnaire survey is also conducted in order to assess the opinions of bank’s manager on dividend issues. Multiple regression analysis and correlation analysis are used to examine the connection between the dividend payout ratios and the determinants of the dividends. Likewise, portfolio sorted on one way sorts of seven independent variables is also employed to see if the relationship shown by regression and correlation analysis really exists. The results of secondary data analysis shows that net profit, cash flows and size of the banks have strong and significant positive impact on dividend payouts while number of major shareholders significantly affects the dividend payout ratio in negative manner. Likewise, market to book value ratio is negligible in explaining dividends; however, these variables have significant positive impact. In contrast, the study documents that leverage ratio and the slack as insignificant in explaining the variations in dividend payout ratios of commercial banks. In line with the findings of the secondary data, the primary survey reveals net profit and the cash flows as the most important determinants of the dividend payout ratios followed by the number of major shareholders and the size of the banks. The major limitations of this study lies in the fact that this study has excluded some firm specific and macro economic variables that might have influence on dividends. Despite the limitations, the findings may have significant degree of implications for both investors and the bank’s management. So, both groups of these stakeholders are recommended to take account of the determinants identified by this study and their relationship with dividend payout ratios. There is wide scope for future studies in same topic. Future studies can increases the sample size including different class of financial institutions to make the results applicable for the entire banking industry of Nepal.

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Barcode	Call number	Media type	Location	Section	Status
3/D	332.632 VAI	Thesis/Dissertation	Uniglobe Library	Social Sciences	Not for loan

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