EFFECT OF CORPORATE DIVIDEND PAYOUT POLICY ON BANK PERFORMANCE IN NIGERIA

The study focused on examining the impact of corporate dividend payout policy on bank performance in Nigeria. The researcher employed five variables as independent variables, namely Bank size, Dividend payout ratio, Earnings per share, Dividend Cover, and Dividend Yield while return on Equity of Deposit Money Banks was used as dependent variable of the study. The ex-post factor research design was used as the study relied on secondary data obtained from annual report and accounts of 10 Deposit Money Banks for data collection purpose. Frequency distribution table and descriptive statistics were used for data presentation and analysis respectively while the formulated hypotheses were tested through the use of the multiple regression analysis. The findings of this study reveal that there is a significant positive relationship between Bank size, Dividend payout, Earnings per share, Dividend yield, Dividend cover and Return on Equity on an individual and collective basis. The study concluded that dividend payout policies of banks in Nigeria are complex and vary in line with the unique internal environment of each bank. Consequently, a high dividend payout policy means more current dividends and less retained earnings, which may consequently result in slower growth and perhaps lower market price per share. Low payout policy means less current dividends, more retained earnings and higher capital gains. Therefore, it is plausible that some investors will prefer high-payout companies while others may prefer low-payout companies. Accordingly, it is recommended that Deposit Money Banks in the country should improve on their performance indicators, particularly as it relates to shareholders’ perspective such as bank size, Dividend payout ratio, Earnings per share, Dividend Cover, Dividend Yield and Return on Equity (ROE) as they are of importance in the valuation of financial performance of the financial industry in Nigeria. Again, banks should adopt optimal dividend policy that would better the lots of shareholders both in the short-run and long-run should be adopted. Lastly, banks should devote adequate time in designing a dividend policy that will enhance firm’s performance and shareholder value. Again, the company should review its dividend policy in order to reduce agency cost and maximize the value of the company.