Determinants Of Dividend Policy In Ethiopian Private Banks

The dividend policy is one of the most debatable topics within corporate finance and somernacademics have called the company’s dividend policy unsolved puzzle. Even though a lotrnof researches regarding dividends have been conducted, there is no uniform answer to thernquestion: what are the determinants of the companies’ dividend policy? Therefore,thernresearcher of this study decided to conduct a study regarding the determinants of dividendrnpolicy of Ethiopian private banks using bank specific factors and macro variables. Thernmain objective of this study was to identify the determinants of dividend policy ofrnEthiopian private banks. To answer the objective of the study, explanatory and descriptivernstudy used&the data covered the period from 2000-2015 for the sample of sixEthiopianrnprivate banks and used secondary and primary data. Both bank specific andrnmacroeconomic variables were analyzed by employing the balanced panel fixed effectrnregression model andthe study used dividend policy as a dependent variable and sevenrnindependent variables; they are profit, leverage, liquidity, retained earnings, loan lossrnprovision, lagged dividend payout, economic growth rate and inflation rate. The result ofrnthe study revealed that profit, leverage, and lagged dividend payment have positive andrnstatistically significant impacts on dividend policy of Ethiopian private banks whilernretained earnings, loan loss provision, inflation have negative and statistically significantrnimpact on dividend policy of Ethiopian private banks whereas liquidity and economicrngrowth rate were found to be statistically insignificant and have no any impact onrndividend policy of Ethiopian private banks.rnKeywords: Dividend policy, Ethiopian private banks, bank specific factors, macrornvariables

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