Determinants of Dividend Payout in Banking Sector: A Case Study of Pakistan

Abstract

This paper relates to determinants of dividend payout for banking sector listed on PSX. The dividend is an important element that shows the performance of the company and growth during the year. This research shows the empirical findings where twenty commercial banks have been taken into account during the period of January, 2006 to December, 2025 i.e. twenty years yearly data. There are six independent variables have to be considered like as financial leverage, investment ratio, liquidity, profitability, capital to assets ratio and size of the bank whereas dividend per share is a dependent variable. The econometric model has been used where the fixed and random effect results have been drawn and as per the Hausman test and fixed effect model is selected. The findings of the results indicate that all of the variables have significant influence on dividend payout except investment ratio as the high amount of retained earnings balance gives adverse effect on dividend payout and proved by signaling theory.