Dividend Policy and Bank Performance in Ghana

Abstract

The main thrust of this study is to find out the relationship between dividend policy and performance of banks in Ghana. The study used panel data constructed from the financial statements of 16 commercial banks in Ghana for a period of 5 years, from 1999-2003. These financial statements were obtained from the Banking Supervision department of Bank of Ghana. STATA was used for the data analysis. From the results of the study, the average dividend paid by banks over the study period was 24.65%. Also, it is apparent that banks that pay dividend increase their performance. The results also reinforce earlier findings that leverage, size of a bank and bank growth enhance the performance of banks. The age factor presents mixed results. Generally, the result is in tandem with earlier studies that dividend policy has an effect on firm value.