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Payout policy and ownership structure: The case of Islamic and conventional banks

Aziz Jaafar (), Andi Duqi and Mohammed Warsame
Additional contact information
Andi Duqi: University of Bologna
Mohammed Warsame: University of Sharjah

No 19010, Working Papers from Bangor Business School, Prifysgol Bangor University (Cymru / Wales)

Abstract: Using a sample of Islamic and conventional financial institutions domiciled in 16 countries for the period 2000-2015, we examine how ownership structure affects dividend policy. Our main findings indicate that ownership identity is important in explaining dividend policy in these banks, albeit in different patterns. In particular, the results suggest that government ownership seems to exert negative effects on dividend payouts in both types of banks, which is in line with the preference of governments towards bank stability. With respect to family ownership, the impact is negative for conventional banks but positive for Islamic ones, consistent with agency theory. These results are to some extent similar in the case of foreign ownership where it is associated with a higher payout policy in Islamic banks, but not significant in conventional ones. Our results are robust to an array of additional analyses including propensity score matching.

Keywords: Agency theory; Islamic banking; ownership structure; payout policy. (search for similar items in EconPapers)
JEL-codes: G21 G35 (search for similar items in EconPapers)
Date: 2019-03
New Economics Papers: this item is included in nep-cfn, nep-hme and nep-isf
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Journal Article: Payout policy and ownership structure: The case of Islamic and conventional banks (2020) Downloads
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