Financial Performance, Firm Characteristics, and Dividend Payout among Deposit Money Banks in Nigeria

Dividend payout decisions constitute an important aspect of corporate financial management because they influence shareholder returns, retained earnings, investment decisions, and perceptions of firms’ financial performance. In Nigeria’s banking sector, dividend decisions have become increasingly complex due to changing economic conditions, regulatory requirements, and firm-specific characteristics. Despite extensive research on dividend policy, existing studies have produced mixed findings and have often examined limited combinations of financial and firm-specific determinants, creating a need for further empirical investigation. This study therefore examined the determinants of dividend payout among Deposit Money Banks (DMBs) in Nigeria, focusing on return on equity, leverage, bank size, board size, and bank age. The study adopted an ex-post facto research design and utilized secondary data obtained from the audited financial statements of 10 selected DMBs listed in Nigeria for the period 2014-2023, generating 100 bank-year observations. Data analysis involved descriptive statistics, correlation analysis, the Hausman specification test, and Panel Ordinary Least Squares regression. The Hausman test supported the application of the fixed-effects model. The regression results revealed that bank age and board size had positive but statistically insignificant effects on dividend per share, while bank size and leverage exhibited negative but insignificant effects. Return on equity also had a positive but statistically insignificant effect on dividend payout. Nevertheless, the model was jointly statistically significant and explained approximately 70.3% of the variation in dividend per share. The study concluded that the selected financial and firm-specific characteristics individually do not significantly determine dividend payout among Nigerian DMBs, suggesting that dividend decisions may be influenced by broader economic, regulatory, and strategic considerations. Future studies should incorporate macroeconomic variables, including inflation, GDP growth, exchange-rate volatility, and monetary policy, alongside corporate governance, ownership structure, capital adequacy, liquidity, and credit-risk indicators. Comparative studies across countries and financial institutions are also recommended to provide broader insights into dividend payout determinants.

Dividend Payout; Deposit Money Banks; Return on Equity; Financial Leverage; Bank Size

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