Determinants of Dividend Payouts: Study on the Insurance Sector of Bangladesh

Abstract

The paper investigates the determinants of dividend payout by examining the insurance sector of Bangladesh listed in both Dhaka stock exchange and Chittagong Stock exchange. Profitability has always been considered as a primary indicator of dividend payout ratio. There are numerous other factors other than profitability also that affect dividend decisions of an organization namely growth, leverage, tangible assets, return on assets, gross premium, and total reserves. Available literature suggests that dividend payout ratio is positively related to return on assets, gross premium and it has inverse relationship with debts, tangible assets, reserve, and growth opportunities. This paper is an attempt to empirically analyze the determinants of dividend payout ratio of Insurance sector. The paper also focuses on identifying whether various factors available as per literature influence dividend payout ratio in Insurance sector in Bangladesh in existing scenario or not. Statistical techniques of correlation and regression have been used to explore the relationship between key variables. Thus, the main theme of this study is to identify the various factors that influence the dividend payout policy decisions of Insurance sector in Bangladesh.