Analysis of Relationship Between Dividend Policy and Financial Performance in Deposit Money Banks in Nigeria
DOI:
https://doi.org/10.70062/globaleconomics.v2i1.191Keywords:
Banks, Descriptive, Earnings Per Share, Financial Performance, Dividend PolicyAbstract
This study set out to investigate the connection between Nigerian deposit money banks' financial success and their dividend policies. This is accomplished by reviewing existing theoretical and empirical the signaling hypothesis served as the foundation for the study and the creation of literature. The Financial Statements and Annual Reports of 18 (18) Deposit Money Banks in Nigeria for the years 2015–2019 provided the data for this study, which used a longitudinal survey research approach. The arithmetic mean, standard deviation, minimum and maximum values, and the Auto-Regressive Distributed Lag (ARDL) regression technique were used to analyze the data produced for this study using both descriptive and inferential statistics. E-Views version 10 was used to calculate these. The study's conclusions showed that dividend policies had a mixed impact on the financial performance of Nigerian deposit money institutions. However, the dividend pay-out ratio significantly and negatively correlates with financial performance (return on equity), dividend yield has no discernible impact on the financial performance (ROE) of Nigerian deposit money institutions. The greatest African economy is that of Nigeria, which was rated as Determining the percentage of dividend payments that would improve financial performance in terms of return on equity requires management of deposit money banks to have a strong and sound dividend policy in place. They should also put in more effort to raise dividend yield and improve its influence on the financial performance (return on equity) of deposit money banks in Nigeria.
References
Abalaka, J. N. (2022). An analysis of the effective monetary policy in a decentralized financial system: A Nigeria in perspective. Arts and Social Science Research, 12(2), December 2022.
Ajiteru, S. A. R. (2022). An analysis of the effective monetary policy in a decentralized financial system: A Nigeria in perspective. Arts and Social Science Research, 12(2), December 2022.
Akimade, B. R. (2016). Dividend policy in dividend decisions. Journal of Investment, 18(2), 393–399.
Akinsulire, O. (2006). Financial management (4th ed.). Ceemol Nigeria Limited.
Amidu, M., & Abor, J. (2006). Determinants of the dividend payout ratio in Ghana. The Journal of Risk Finance, 7(2), 136–145. https://doi.org/xxxx
Baker, H. K., & Powell, G. E. (1999). How corporate managers view dividend policy? Quarterly Journal of Business and Economics, 38(2), 17–27.
Bannock, B. D. (1998). The Penguin dictionary of economics. Clays Ltd.
Black, F. (1976). The dividend puzzle. The Journal of Portfolio Management, 2, 58.
Chandra, P. (2002). Financial management theory and practice (5th ed.). Tata McGraw-Hill Publishing Ltd.
Demsetz, H., & Lehn, K. (1985). The structure of corporate ownership: Causes and consequences. Journal of Political Economy, 93, 1155–1177. https://doi.org/xxxx
Enekwe, C. I., Nweze, A. U., & Agu, C. (2015). The effect of dividend payout on performance evaluation: Evidence of quoted cement companies in Nigeria. European Journal of Accounting, Auditing and Finance Research, 3(11), 40–59.
Farsio, F., Geary, A., & Moser, J. (2004). The relationship between dividends and earnings. Journal for Economic Educators, 4(4), 1–5.
Gul, S., Sajid, M., Razzaq, N., Iqbal, M. F., & Khan, M. B. (2012). The relationship between dividend policy and shareholders’ wealth: Evidence from Pakistan. Economics and Finance Review, 2(2), 55–59.
Idewele, I. O. E., & Murad, B. A. (2019). Dividend policy and financial performance: A study of selected deposit money banks in Nigeria. African Journal of Business Management, 13(7), 239–255. https://doi.org/xxxx
Kajola, S. O., Adewumi, A. A., & Oworo, O. O. (2015). Dividend payout policy and firm financial performance: Evidence from Nigerian listed non-financial firms. International Journal of Economics, Commerce and Management, 3(4), 1–12.
Lasher, W. (2000). Practical financial management (2nd ed.). Thomson South-Western.
Miller, M. H., & Rock, K. (1985). Dividend policy under asymmetric information. Journal of Finance, 40, 1031–1051. https://doi.org/xxxx
Modigliani, M. H., & Miller, F. (1961). Dividend policy, growth, and the valuation of shares. Journal of Business, 411–424. https://doi.org/xxxx
Mohammed, A. (2007). Determinants of capital structure of banks in Ghana: An empirical approach. Baltic Journal of Management, 2(1), 67–79.
Monogbe, T. G., & Ibrahim, A. A. (2015). Dividend policy on financial performance: A case study of selected registered firms in Nigeria. Research Journal of Finance and Accounting, 6(20), 1–7.
Raham, A., & Wali, A. (2018). Effect of dividend policy on firm’s performance: A case study of cement sector of Pakistan. SEISENSE Journal of Management, 1(5), 6–15.
Ross, S. A., Westerfield, R. W., & Jaffe, J. (2002). Corporate finance (6th ed.). McGraw-Hill Companies.
Sulaiman, T. H. (2022). An analysis of the effective monetary policy in a decentralized financial system: A Nigeria in perspective. Arts and Social Science Research, 12(2), December 2022.
Velnampy, T., Nimalthasan, M. P., & Kalaiarasi, M. K. (2014). Dividend policy and firm performance: Evidence from the manufacturing companies listed on the Colombo Stock Exchange. Global Journal of Management and Business Research, 14(6), 17–28.
