Determinants of Dividends Pay-out Ratio for Listed Commercial Banks in Kenya

Abstract

The purpose of this study was to establish the determinants of dividend payout ratio for listed commercial banks in Kenya. The target population of the study consisted of 11 commercial banks listed in the Nairobi Securities Exchange in Kenya. The study relied on secondary data. The results consistently support the potential association between the independent variables and the dependent variable (dividend payout) for commercial banks listed at the Nairobi Securities Exchange in Kenya. Liquidity and profitability had a positive correlation with dividend payout while earnings and inflation had a negative correlation with dividend payout. At 5% level of significance, liquidity and profitability were found to be statistically significant while inflation and earnings were not significant.The study recommends that commercials banks should consider their profitability, liquidity, inflation and earnings in designing a dividend policy.