Impact of financial distress on the dividend policy of banks in India: evidence using panel data

Aashi Rawal () and Santosh Gopalkrishnan ()
Additional contact information
Aashi Rawal: Symbiosis Institute of Business Management Pune, Symbiosis International (Deemed) University
Santosh Gopalkrishnan: Symbiosis Institute of Business Management Pune, Symbiosis International (Deemed) University

Future Business Journal, 2024, vol. 10, issue 1, 1-11

Abstract: Abstract The study primarily aims to examine the impact of financial distress on the dividend distribution policy of banks operating in India. Panel data analysis was performed using a static model to investigate the impact of distress on the bank’s dividend policy. The Z-score developed by Altman measures a bank’s financial distress (a high Z-score indicates the absence of financial distress). Data from 31 out of 34 banks operating in India between 2016 and 2020 has been used. The debt/equity ratio is used as the moderator. The sales log is used as the control variable. A linear connection exists between financial distress and dividends. Furthermore, debt/equity ratio significantly moderates the association of financial distress with dividend policy. The findings contribute to formulating a long-term dividend policy by drawing attention to the distressing situation in the banking sector, focusing on ensuring the banks’ financial viability. Thereby, the findings are novel and hold significant worth in improving the current understanding of the subject.

Keywords: Financial distress; Dividend payout; Debt/equity ratio; Panel data analysis (search for similar items in EconPapers)
JEL-codes: C23 G01 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1186/s43093-024-00310-y Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:futbus:v:10:y:2024:i:1:d:10.1186_s43093-024-00310-y

Ordering information: This journal article can be ordered from
https://fbj.springeropen.com/

DOI: 10.1186/s43093-024-00310-y

Access Statistics for this article

Future Business Journal is currently edited by Soad Kamel Rizk and Hayam Wahba

More articles in Future Business Journal from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().