Effect of Dividend Policy on The Growth of Deposit Money Banks in Nigeria
Keywords:
Dividend policies, per share, payout ratio, yield and growthAbstract
The study determined effect of dividend policy on the growth of deposit money banks in Nigeria. However, the study investigated the effect of dividend per share on growth of deposit money banks; secondly, the effect of dividend payout ratio growth of deposit money banks; and the extent to which dividend yield affects the growth of deposit money banks in Nigeria. The study was anchored on the theory of Dividend Irrelevance, initially proposed by Franco Modigliani and Merton Miller in 1961. The study adopted ex-post facto research design. Secondary data was collated from 7 banks for the period of 2013-2023. Data relating to research questions were analyzed using descriptive inferential statistics with the use of E-View 19. Findings revealed a significant effect of dividend per share on the growth of money deposit banks in Nigeria (P < 0.05); relatively, there is a significant effect of dividend payout ratio on the growth of money deposit banks in Nigeria (P < 0.05); and Dividend yield has statistically significant effect on growth of money deposit banks in Nigeria (P < 0.05).The study concluded that the effects of dividend policy on the growth of money deposit banks in Nigeria emphasize the necessity for a balanced and strategic approach. A well-calibrated dividend policy that aligns with the banks' growth aspirations while meeting the expectations of stakeholders is pivotal in fostering sustainable growth, maintaining financial stability, and maximizing shareholder value in the Nigerian banking sector. The study recommended that banks should compare growth patterns of banks based on varying dividend per share ratios, recommend a correlation analysis between dividend per share and growth metrics to identify optimal dividend levels.