Ownership Structure and Bank Dividend Policies: New Empirical Evidence from the Dual Banking Systems of MENA Countries

Abstract

This study investigates the relationship between ownership structures and dividend policies for 46 Islamic and 75 conventional banks from 12 MENA and Asian countries between 2012 and 2020. Logit regression is employed to estimate the regression equation, centering on the moderating impacts of the COVID-19 pandemic and national culture. Our findings remain robust as we tackle the endogeneity issue using probit and logistic regression models. Asset growth and GDP growth serve as proxies for investment opportunities. Additionally, dividend per share acts as a proxy for dividend policy. Our findings emphasize how the ownership structure impacts dividend payouts in both banking systems. We observed positive relationships between dividend payouts and foreign ownership, bank size, age, and performance. Conversely, concentration of ownership and leverage negatively influence dividend payouts. The COVID-19 pandemic directly boosts the dividend policy for conventional banks and alters the relationship between foreign ownership and distribution policy in Islamic banks. Specifically, COVID-19 interacts with foreign and state ownership to reduce dividend payouts, but concentration of ownership does not show this effect. This study furnishes evidence affirming the significance of the ownership structure in shaping the dividend payout policy within Islamic and conventional banking. The results maintain their reliability across various estimation approaches. Moreover, this study accounts for the crisis period as a moderating factor influencing dividend payments.