Measuring and Analyzing the Effects of Dividend Policy in Banking Profits and Growth

Abstract

The paper examined the effects of dividend policy on profits and growth of banking firms in Nigeria. Survey research design was adopted and structured questionnaire was administrated to elicit data from employees of Eco Bank Plc. Three hypotheses were formulated and tested using chi-square statistical tool. The findings revealed that dividend policy is a strategic tool for growth in the banking industry and dividend payout has an impact in the wealth maximization in the banking industry. It also revealed that there is significant relationship between the dividend policy and profitability in the banking industry. The paper therefore recommended that the board of directors should review the dividend payout policy of the banking industry to ensure maximum operation. The banking sector should also ensure compliance with relevant and required policies of dividend payment in order to reduce the adverse effects of dividend payment on the profitability of the banking industry.

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