Balance sheet and income statement effect on dividend policy of private commercial banks in Ethiopia

Figures & data

Figure 1. Conceptual framework.Sources: Own design 2021

Table 1. Variables and definitions

Variables	Symbol	Definitions	Expected direction of effect
Dependent variable
Dividend policy	DOP	The ratio of dividend paid to net income after tax for bank i at time t
Independent variables
Profitability	ROA	The ratio of net income after tax to total asset of bank i at time t	+
Growth ratio	GRO	Annual changes in total assets of bank i at time t	+
Asset size	AS	The annual logarithm of the total asset of bank i at time t	±
Leverage	LEV	The ratio of total debt to total assets of bank i at time t	-
Liquidity	LIQ	The ratio of current asset to current liability for bank i at time t	+

Sources: Owen design 2021

Table 2. Descriptive statistics of the variables

Variable	Obs	Mean	Std. Dev.	Min	Max
DPO	80	.6026101	.1223553	.148	.827
ROA	80	.0362363	.0146896	.002	.093
LEV	80	.1458125	.0578079	.09	.507
LIQ	80	0.1563	0.321447	0.02	.214
BS	80	9.807	.8357918	6.42	11.05
GRO	80	.65615	.138025	.34	.98

Sources: Stata 14 Summary of statistics result

Table 3. Correlation matrixes

DPO	ROA	LEV	BS	LR	OE	GR
DPO	1.0000
ROA	0.2910	1.0000
LEV	−0.1419	−0.2469	1.0000
BS	0.3154	0.2297	−0.6395	1.0000
LIQ	0.1563	−0.1221	−0.1701	0.0417	1.0000
GRO	−0.0355	−0.0485	−0.0336	0.0387	−0.0920	0.1470	1.0000

Sources: Stata 14 correlation analysis

Table 4. Regression analysis of variables

	Coef.	Std. Err.	z	P>|z|	[95% Conf.	Interval]
DPOi,t-1	0.6321	0.035741	1.26	0.000***	.5475621	2.154862
ROA	2.2503	.8568926	2.63	0.009***	.5708213	3.929778
LEV	−.279248	.2780074	−1.00	0.0315**	−.8241325	.2656365
BS	.0454813	.0224576	−2.03	0.0431**	−.0894973	−.0014652
LIQ	.0646514	.0999081	−0.65	0.0518**	−.2604677	.1311649
GRO	−.042178	.1162888	0.36	0.0717*	−.1857438	.2700999
Cons	.9458371	.2359159	4.01	0.000	.4834505	1.408224
Wald stat	11.65
AdjR^2	36.57
AR2(p- value)	0.0703

Sources: Regression result Computed from stata 14. ***, **,* indicates significant at 1%, 5% and 10% significance level respectively.

Table 5. Multicollinearity test for explanatory variables

Variable	VIF	1/VIF
LEV	1.81	0.552839
BS	1.72	0.581795
ROA	1.29	0.774930
LIQ	1.10	0.911140
GRO	1.03	0.968017
Mean VIF	1.36

Sources: Stata 14 test statistics result

Table 6. Normality

Variable	Obs	W	V	Z	Prob>z
Residual _hat	80	0.95696	2.954	2.373	0.2881

Sources: Stata 14 test statistics result