Factors Influencing Dividend Policy Decisions in Banking Sector: An Indian Evidence

Amity Business Review, Vol. 7, No. 2, pp. 64-76, July-December 2006

27 Pages Posted: 4 Oct 2012

See all articles by Dr. Jasvir S. Sura

Dr. Jasvir S. Sura

Department of Business Studies and Research,Kurukshetra University P. G. Regional Centre, Jind

Karam Pal

Guru Jambheshwar University of Science and Technology

B. S. Bodla

Guru Jambheshwar University of Science and Technology

Date Written: September 27, 2012

Abstract

The present study re-examines the applicability of Lintner’s (1956) and Britain (1966) path breaking analyses of dividend policy. The banks listed on National Stock Exchange, and declaring dividend consistently from the last eleven years constitute the sample for the present study. Here, we have carried out a cross-sectional analysis for the years 1996 to 2006. The results are found in-line to the Lintner model as well as Britain cash flow model. The findings offer evidence that stable dividend policy is followed by commercial banks in India. The results indicate that the major determinants of current dividend are lagged dividend and the current earnings. The above evidence is almost similar to those in developed markets like the U.S. The study is also found giving support to argument of ‘information content of dividend’ in the context of dividend proceeds. Hence, dividend policy can be used as signaling device by the management of the banks.

Keywords: Lintner’s model, dividend policy, commercial banks, cash flow model

Suggested Citation

Sura, Jasvir Singh and Pal, Karam and Bodla, B. S., Factors Influencing Dividend Policy Decisions in Banking Sector: An Indian Evidence (September 27, 2012). Amity Business Review, Vol. 7, No. 2, pp. 64-76, July-December 2006, Available at SSRN: https://ssrn.com/abstract=2152858

Jasvir Singh Sura (Contact Author)

Department of Business Studies and Research,Kurukshetra University P. G. Regional Centre, Jind ( email )

Department of Business Studies and Research
Kurukshetra University P. G. Regional Centre
Jind, Haryana 126102
India
+919466778222 (Phone)

HOME PAGE: http://www.kuk.ac.in

Karam Pal

Guru Jambheshwar University of Science and Technology ( email )

hisar, haryana 125001
India

B. S. Bodla

Guru Jambheshwar University of Science and Technology ( email )

hisar, haryana 125001
India

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