Abstract:
Purpose: The objective ofthe study is to identify the factors that affect dividend payout policy
of conventional banks of Pakistan using panel secondary data.
Methodology & Design: The sample population for the current study was selected as the top
10 conventional banks of Pakistan on the basis of their market capitalization from the
conventional banks listed on PSX, and for analysis while ample period was selected as 2013
to 2017. However, pooled OLS analysis using random-effect, correlation analysis and
Hausman test has been employed for data analysis using EViews 9.
Findings: The results in the above table showed that profitability has significantly positive
impact on dividend yield of conventional banks in Pakistan while natural log of cash flow
found statistically insignificant and negatively related with dividend yield. In addition,
financial leverage found positively related with dividend yield while investment growth
opportunities found significant but negatively related to dividend yield of conventional banks
in Pakistan. However, lagged dividend was found statistically insignificant in relation with
dividend payout policy of conventional banks in Pakistan.
Limitations: Comparatively smaller sample population and period; wherein, consideration to
specific sector and region also restrain its generalizability to larger proportion and applicability
comprehension. Further, it has included dividend payout policy ofconventional banks.
Implications: Managers should be continuously focusing on the company’s investment
opportunities. Wide range ofinvestments should be focused on by the managers. The more the
company invests, the more its risks would decrease and the opportunities to earn more profit
would increase.
