Determinants of Dividend Policy of Quoted Deposit Money Banks in Nigeria

Abstract

Dividend policy has attracted the attention of researchers since 1950s as regard to proportion of earnings of a company to be paid out as a dividend, factors influencing such payment decision and the impact of the payment on the firm value. This study examined the determinants of dividend pay-out of quoted deposit money banks in Nigeria. The study covered a period of Twelve (12) years ranging from 2006 to 2017. Ex-post facto research design and secondary data were adopted. The study population is the fifteen (15) quoted deposit money banks on the Nigeria Stock Exchange. Twelve (12) of them were selected using purposeful sampling technique. The Ordinary Least Square Regression was employed with the aid of E-view 9 to estimate the effect of earnings per share and size on dividend pay-out of quoted deposit money banks in Nigeria. The study used Panel data and based on the Hausman result, Fixed Effect model was adopted. The study reveals that earnings per share of deposit money banks has significant positive effect on the dividend pay- out while size has no significant effect on the dividend pay-out of deposit money banks in Nigeria. The study concludes that accounting profit is the major and most significant of dividend determinants of listed banks. The study recommends that quoted deposit money banks in Nigeria should continue to improve on their earnings quality, Central Bank of Nigeria (CBN) should ensure listed banks management maintain high assets quality.