Determinants of Dividend Payouts in Ethiopian Private Banks: A Firm-Specific Analysis

This study investigates the firm-specific factors influencing the dividend payout ratio (DPR) among private commercial banks in Ethiopia. Utilizing regression analysis, the research identifies six key explanatory variables: profitability, liquidity, leverage, growth of gross earnings, bank size, and previous year's dividend payout, explaining 78% of the variation in DPR. The findings reveal that profitability positively impacts dividend payouts, with a coefficient of 0.298399, while liquidity also shows a positive relationship, indicated by a coefficient of 0.234192. Conversely, leverage and growth of gross earnings negatively affect dividend payouts, with coefficients of -19.28864 and -20.92513, respectively. Additionally, bank size and the previous year's dividend payout significantly influence current payouts, with coefficients of 0.151411 and 0.484547. These results align with similar studies conducted in various countries, highlighting the global relevance of these factors. The research provides valuable insights for bank managers to formulate effective dividend policies and suggests avenues for future research, including the exploration of external factors and comparative studies across different banking sectors.