Determinants and Dynamics of Dividend Policy: Evidence from Pakistan’s Banking Sector
Keywords:
Dividend policy, panel data, reforms, Karachi Stock ExchangeAbstract
This paper analyzes the dividend policy of 18 banks listed on the Karachi Stock Exchange (KSE) during the period 2001-2007. The study outlines the main determinants that may drive the dividend policy of KSE listed banks. Lintner’s model has been applied in a dynamic setting. The Lintner model result maintains the listed banks in Pakistan depend on earning per share and past dividend to decide their dividend payments. However, the results show that dividend tend to be more to current earning as compared to the dividend trend in the past. The results indicate that profitable banks have more free cash flow and they pay more dividends. Moreover, assets growth does not seem to be consistent with the dividend policy.Financial leverage also has no impact on dividend policy of Pakistani banks.
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This work is licensed under a Creative Commons Attribution 4.0 International License.
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