Determinants of Dividend Payout in Awash International Bank (AIB) Share Company

Abstract

The main purpose of the study is to examine the determinants of dividend payout in AIB. In order to achieve this objective, the study uses both descriptive and explanatory research design. Twenty years’ time series data (1994/1995 to 2014/15) were collected from audited financial statement which was the whole population. The study used dividend payout as a dependent variable and five independent variables: profitability, liquidity, leverage, growth and size. The findings indicated that among the five independent variables; profitability and leverage have statistically significant impact on dividend payout; the remaining three variables have no statistically significant impact on dividend payout. Thus, profitability and leverage have a significant impact on dividend payout in AIB. Therefore, board of directors of banks need to consider these variables while designing their dividend payout policy. By the same token, investors need to consider these variables in their investment decisions when they want to make an investment in AIB.