Assessing the Impact of Dividend Policy on Investor Decisions in the Nigerian Banking Sector.

Abstract

This study set out to examine the impact of dividend policy on investors’ decision-making, with evidence from the Nigerian banking sector. This research sought to evaluate the dividend policy strategy adopted by the banking sub-sector of the Nigerian Stock Exchange, in relation to the dividend preferences of the investors of major commercial banks within the Nigerian economy. In other to achieve the research objectives, recourse was had to the application of established dividend literature and theories on the Nigerian market or banking sector. Evidence was based on the primary data obtained through the use of semi-structured interviews with participants recruited from the executive members of the Nigerian Investment Forum (NIF). Input from expert body was supplemented with the use survey questionnaire on non-executive member of aforementioned body. Response data from both sources was thereafter subjected to rigorous analysis using the mixed method or approach. Thematic analysis was applied to interpret data from interview conducted and descriptive statistics used for survey data. It was found that banking sector management in Nigeria strategically and adequately utilize payout policies that majorly reflect investor’s preferences by ensuring steady profitability level and valuable, consistent payouts and the right mix of payout-reinvestment options. It was also observed that banks and investors are helped by the much-needed confidence in the sector made possible by adequate regulatory effort and reforms by the Central Bank of Nigeria and other bodies.