The relationship between dividend policy and bank growth

  • Received October 28, 2021;
    Accepted December 23, 2021;
    Published December 27, 2021
  • Author(s)
  • DOI
    http://dx.doi.org/10.21511/bbs.16(4).2021.18
  • Article Info
    Volume 16 2021 , Issue #4, pp. 218-228
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This work is licensed under a Creative Commons Attribution 4.0 International License

The purpose of this study is to investigate the association between bank growth and the retained earnings amount for Jordanian banks between 2010 and 2020. The method to be used is regression models. Bank growth is measured using the change in total assets; income retention is measured by subtracting dividends from earnings per share and by deducting dividend per share from the operating cash flow on the accrual basis and cash basis. In addition, another specification will be used to the association between the growth of a bank’s total assets and income retention using the percentage change in the growth of a bank’s total assets and income retention on the accrual and cash basis. The findings of pooled OLS regression models and random effect models show that there is no relationship between income retention using the accrual basis and the bank total assets growth (Adj-R2 was –005). There is a significant relationship between income retention using the cash basis and the bank growth in total assets (Adj-R2 was 14%). There is no significant association between change in income retention using the cash basis and the bank growth in total assets, and bank size affects the relationship between income retention and bank growth in total assets. Users of financial statements need to be aware of the association between the several variables used in this study to make sound decisions.

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    • Table 1. Descriptive analysis
    • Table 2. Pearson (Spearman) correlation matrix
    • Table 3. The first model
    • Table 4. The second model
    • Table 5. The third model
    • Table 6. The fourth model
    • Table 7. Regression results according to size
    • Table 8. Model coefficients
    • Table 9. Hausman test results
    • Table 10. Random effect models
    • Conceptualization
      Mohammad Fawzi Shubita
    • Data curation
      Mohammad Fawzi Shubita
    • Formal Analysis
      Mohammad Fawzi Shubita
    • Funding acquisition
      Mohammad Fawzi Shubita
    • Investigation
      Mohammad Fawzi Shubita
    • Methodology
      Mohammad Fawzi Shubita
    • Resources
      Mohammad Fawzi Shubita
    • Writing – original draft
      Mohammad Fawzi Shubita
    • Writing – review & editing
      Mohammad Fawzi Shubita