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International Journal of Management and Business Development

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Dividend Policy and Corporate Performance in Nigerian Banks: An Empirical Analysis

DOI https://doi.org/10.55640/ijmbd-v02i12-01
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Olamide Ayodele 1 , Temiloluwa Ajibade 1 ORCID iD , Maimoona Khalid Aziz 1 ORCID iD , Hajirah Farooq 1 , Syeda Morsheda Sogra 1 ORCID iD , Syeda Faiza Sogra 1 ORCID iD , Tina Puri 1 ORCID iD , Madiha Hassan 1 , Kennedy Oberhiri Obohwemu 1 ORCID iD , Fidelis Evwiekpamare Olori 1 , Kingsley Chimaobi Akabuokwu 1 , Rabeea Rizwan 1 ORCID iD , Samrina Afzal 1 ORCID iD , Sayma Akter Jannat 1 ORCID iD ,
4 PhD, Department of Finance, Ekiti State University, Nigeria; and PENKUP Research Institute, Birmingham, United Kingdom
4 PhD, Department of Business Management Scholars School System, Leeds Trinity University Partnership, Birmingham Campus, United Kingdom; and PENKUP Research Institute, Birmingham, United Kingdom
4 MSc, Department of Business Management Scholars School System, Leeds Trinity University Partnership, Birmingham Campus, United Kingdom; and PENKUP Research Institute, Birmingham, United Kingdom
4 MSc, Department of Business Management Scholars School System, Leeds Trinity University Partnership, Birmingham Campus, United Kingdom; and PENKUP Research Institute, Birmingham, United Kingdom
4 MSc, Department of Business Management Scholars School System, Leeds Trinity University Partnership, Birmingham Campus, United Kingdom; and PENKUP Research Institute, Birmingham, United Kingdom
4 MSc, Department of Business Management Scholars School System, Leeds Trinity University Partnership, Birmingham Campus, United Kingdom; and PENKUP Research Institute, Birmingham, United Kingdom
4 MBA, Department of Business Management Scholars School System, Leeds Trinity University Partnership, Birmingham Campus, United Kingdom; and PENKUP Research Institute, Birmingham, United Kingdom
4 MPhil, Department of Business Management Scholars School System, Leeds Trinity University Partnership, Birmingham Campus, United Kingdom; and PENKUP Research Institute, Birmingham, United Kingdom
4 PhD, Department of Interdisciplinary Research and Statistics, PENKUP Research Institute, Birmingham, United Kingdom
4 PhD, Faculty of Business Management, Oxford Brookes University, GBS Partnership, Birmingham, United Kingdom; and PENKUP Research Institute, Birmingham, United Kingdom
4 MBA, Faculty of Business, Results Consortium Limited, Leeds Trinity University Partnership, Northampton, United Kingdom; and PENKUP Research Institute, Birmingham, United Kingdom
4 MPhil, Department of Interdisciplinary Research and Statistics, PENKUP Research Institute, Birmingham, United Kingdom
4 Pharm. D, Department of Interdisciplinary Research and Statistics, PENKUP Research Institute, Birmingham, United Kingdom
4 BBA, Department of Finance, Jagannath University, Dhaka, Bangladeh; and PENKUP Research Institute, Birmingham, United Kingdom

Abstract

Dividend policy remains one of the most enduring debates in corporate finance because it sits at the intersection of investment, liquidity, and shareholder-value decisions. While some scholars argue that dividend payments merely reallocate wealth, others insist they are vital signals of corporate health and managerial confidence. This study investigates the relationship between dividend policy and corporate performance in the Nigerian banking sector using data from 1990–2013, and interpreted in light of developments up to 2025, thereby covering a 35‑year period. The analysis thus extends to post‑2013 trends, including the impact of recapitalisation initiatives, digital transformation, and the macroeconomic disruptions associated with the COVID‑19 pandemic.

Using data from four major banks (First Bank of Nigeria, Guaranty Trust Bank [now Guaranty Trust Holding Company Plc (GTCO Plc)], United Bank for Africa, and Union Bank), the study applies multiple regression and Newey–West HAC estimation techniques to explore how dividend per share (DPS), debt-equity ratio (DER), and current ratio (CUR) influence return on capital employed (ROCE) and market value per share (MVPS). The findings show that dividend per share is a significant predictor of profitability and market valuation, while DER and CUR have mixed effects depending on institutional context. These results affirm the relevance of dividend policy as a strategic tool for enhancing financial performance and sustaining investor confidence, even in volatile and evolving markets.

The study concludes that consistent and transparent dividend practices promote corporate stability and strengthen market trust in Nigeria’s banking industry. It recommends that banks strike a prudent balance between rewarding shareholders and retaining earnings to fund innovation, capital adequacy, and long-term growth.

Keywords

Dividend policy, corporate performance, dividend per share, return on capital employed, market value per share, Nigerian banks

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