EFFECT OF DIVIDEND POLICY ON ORGANIZATION PERFORMANCE: A CASE STUDY OF THE NIGERIAN BANKING SECTOR

Abstract

This investigation analyzed the effect of the dividend policy on bank performance in Nigeria. Secondary source of data was employed which was sourced from WEMA Bank Nigeria PLC. The data was gathered from the various audited publications of the bank financial statement. The data was analyzed with different estimation techniques ranging from regression analysis was employed to capture the impact of the independent variables as against the dependent variable, ARDL models and its bound test and vector autoregressive analysis (VAR) were used to capture the long-run relationship. While pairwise granger causality was also used to examine the causal effect of the study variables. The findings from the analysis found that return on equity and return on asset were stationary after first difference while dividend yield and dividend payout ratio were stationary at level. The bound test reported that the null hypothesis that no long run relationships exist failed to be rejected since the t-statistic value is lower than the critical bound values at 10%, 5%, and 1% respectively. The dividend yield contributes negatively and insignificantly to influence return on equity. DPR was positive but insignificant to influence return on equity during the study period. The ARDL bound test showed that the null hypothesis that no long-run relationships exist was rejected since the t-statistic value is more than the critical bound values at 10%, 5%, and 1% respectively. The study concluded that dividend yield (DY) contributes negatively and insignificantly to influence return on asset (ROA) while dividend payout ratio contributes positively and significantly to influence ROA. Meanwhile, no long-run relationship exists between the variables. It was also concluded that dividend yield contributes negatively and insignificantly to influence return on equity and dividend v payout ratio was positive but insignificant to influence return on equity during the study period and there is no long-run relationship between the variables