Determinants of Dividend Policy: Evidence from Non-banking Financial Institutions in Bangladesh

Abstract

Dividend Policy is regarded as one of the most important topics in corporate finance. It also has paramount importance to all firms and stakeholders. The main purpose of this study is to find out the determinants of dividend policy for non-banking financial institutions listed in the Dhaka Stock Exchange (DSE) during the period 2015-2019. This study considers 21 non-banking financial institutions as a sample among the total of 34 non-banking financial institutions. The Panel Regression Model has been applied to find out the factors that have a significant influence on dividend policy. This study considered dividend payout ratio as dependent variable and ROA, debt to equity ratio, growth ratio, price to earnings ratio, ROE as independent variables, and GDP, interest rate, exchange rates are used as control variables. The results revealed that only firm-specific variables like debt to equity ratio and return on equity have been found statistically significant to influence the dividend policy. No other variables have any significant influence in determining the dividend policy of non-banking companies even after controlling the macro variables in the model.