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Product market competition, regulation and dividend payout policy of Malaysian banks

Rashid Ameer

Journal of Financial Regulation and Compliance, 2008, vol. 16, issue 4, 318-334

Abstract: Purpose - This paper aims to investigate the impact of the product market competition, regulations on the dividend policies of the listed banks, over the period 1995-2005 in Malaysia. Design/methodology/approach - An ordered probit modelling technique and target adjustment model is used. Findings - Significant differences are found in the payout of the banks categorized as selling non-interest based banking products and mix of both interest and non-interest based banking products. It is found that the decision to increase dividends is significantly related to earnings, and the decision to cut dividend is significantly related to the changes in the non-performing loans, corporate and real estate sectors loans ratio and earnings losses. Research limitations/implications - The research findings have implications for the regulators of banks. Originality/value - The research provides a clear link between banks' portfolio choice and earnings that have implications for dividends in emerging markets.

Keywords: Dividends; Banks; Loans; Mathematical modelling; Malaysia (search for similar items in EconPapers)
Date: 2008
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