A Determinants of Dividend Payout Ratio in Indonesian listed Banking

This paper is investigating determinants of dividend payout ratio in Indonesia listed banking for year 2012-2018. Dividend is important factors for investors make decision whether to buy or sell shares especially shares in banking industry. Banking industry is essential financial institution for a country and its growth is very important. This paper address on what should be look for determinants of Dividend Payout Ratio for banking industry. Not many papers investigate Dividend Payout Ratio in Indonesian banking industry. Independent variables are factors Loan Deposit Ratio (LDR), Capital Adequacy Ratio (CAR) and Return on Equity (ROE). As literature reveals many contradictions in dividend theory, we investigated which factors effect on banking industry listed in Indonesian Stock Exchange. Sample is selected using purposive sampling with total 10 banks meet criteria. Analyses method used in this paper is multiple regression using E-views version 9.0 and the model is Fixed Effect. Regression results are LDR and ROE affect Dividend Payout Ratio. We suggest bank can manage its LDR ratio wisely since LDR is a source of revenues for bank, while ROE ratio must be assessed regularly because ROE is a measurement how well bank uses its resources to generate profit. Implication on this paper are first, good banking can manage its LDR efficiently because different between Loan and Deposit is profit for the bank, secondly, ROE is profit and consistently effect on dividend. Hence investors should invest on banking industry with consistently yield profit.