The Impact of Dividend Performance on Financial Performance: Evidence from Indian Public and Private Sector Banks

Abstract

A banking system in a country is a backbone of its financial system. Both public and private banking entities play an indispensable part in the country’s development by facilitating the mobilization of savings, lending of credit, and promoting financial inclusion. In India, “Public Sector Banks” (PSBs) that are controlled by the Government while “Private Sector Banks” (PVBs) are controlled by private entities. This research work measures and analyzes the impact of dividend performance of select public and private sector banks functioning in India. Descriptive research is employed because it intends to find the nexus between dividend performance and financial performance of Indian banks. Sampling technique employed is purposive sampling technique to select the banks from public and private sectors. The sampling criteria include mandatory listing of banks either in NSE or in BSE, and availability of dividend and financial data during study period. First 5 banks are PSBs and other 5 banks are from PVBs. The results reveal that DPR is the only variable that affect ROA and ROE of both PSBs and PVBs in India. DPS and EPS have no significant direct effect on ROA and ROE of public and private sector banks.