Dividend policy in the banking sector in G-7 and GCC countries: A comparative study
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Dividend policy has been a puzzling question for many years. This study attempts to identify the key factors affecting it in the financial sector that have been neglected in the literature. Using panel data on 621 Group of Seven (G-7) banks and 68 Gulf Cooperation Council (GCC) banks, five main factors namely, banks’ size, profitability, growth, leverage, and last year’s dividend were empirically tested regarding their impact on dividend payout ratios. In addition to comparing the two economies descriptively, the researchers employed panel data analysis using multiple regression with random effects. The findings revealed that the dividend payout ratio for the GCC countries is higher than G-7 countries in every year of the examined period (2010-2015). Furthermore, for both G-7 and GCC banks, profitability and last year dividend had a significant positive influence while banks’ leverage had a significant negative influence on the dividend payout. It was found also that banks’ size is an important dividend determinant in the G-7 countries only.
Risk Governance & Control: Financial Markets & Institutions;
Hanifa, H., Hamdan, M., & Haffar, M. (2018) 'Dividend policy in the banking sector in G-7 and GCC countries: A comparative study', Risk Governance and Control: Financial Markets & Institutions, 8(3), 70-79. http://doi.org/10.22495/rgcv8i3p5
Article published in Risk Governance and Control: Financial Markets & Institutions, available open access at http://doi.org/10.22495/rgcv8i3p5
Cardiff Metropolitan University (Grant ID: Cardiff Metropolian (Internal))