Dividend Policy Case Study Of Private Banks Of Ethiopia

A number of studies have been conducted in the area of dividend policy inrnthe developed capital markets. Few researchers also tried to investigate onrndividend policy in emerging markets where the financial system is bankrncentered. This paper explicitly looks into the dividend decision determinantsrnof the four private banks of Ethiopia namely Awash International Bank S.C,rnBank of Abyssina S.C., Dashen Bank S.C. and Wegagen Bank S.C. from thernyear 1996 to 2002. The findings show that given the institutional structure ofrnthe banks, the undeveloped form of the financial markets and the age of thernbanks being in their early stage of growth, dividend decisions are primarilyrnfocused on fulfilling legal requirements, i.e., capital adequacy, liquidity andrnreserve requirements. In addition, the fund needs, the availability andrnaccess to external finance, tax, control (protection against dilution),rnshareholders preference and earnings are among the determinants that arernidentified to be factors that have dictated the dividend decisions of thesernbanks

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