DIVIDEND POLICY AND FINANCIAL PERFORMANCE OF DEPOSIT MONEY BANKS IN NIGERIA

ABSTRACT

This study empirically investigates the nexus between dividend policy and financial performance of deposit money banks in Nigeria, using data for 12 deposit money banks listed on the Nigerian Exchange Limited (NGX) for the period 2015-2020. Return on asset (ROA) - the dependent variable is regressed on six explanatory variables. Dividend payout, retained earnings, dividend yield, dividend per share, advantage and size. Employing panel data econometric techniques, the empirical findings show that dividend policy significantly affect firm financial performance of deposit money banks in Nigeria. In particular, dividend payout ratio is negatively and significantly related to ROA. Retained earnings, dividend yield, dividend per share and leverage are positively and significantly related to ROA. Further evidence show that size is positively related to ROA (proxy for financial performance) of deposit money banks, nonetheless a weak effect. In view of the foregoing empirical findings, it is recommend that robust and result-yielding dividend policies be implemented in order to enhance the financial performance of deposit money banks in Nigeria