Artha Vijnana: Journal of The Gokhale Institute of Politics and Economics

Saibal Ghosh ¹

Affiliations
1 Reserve Bank of India, Mumbai, IN

Abstract

The paper empirically investigates the dividend strategy of a sample of Indian manufacturing firms. Dividend policy is measured by the probability that dividend is paid, and the relative amount of dividends paid. It is found that bigger and mature firms tend to pay higher dividends. We also find significant divergence in dividend policy across firm ownership. More specifically, the possibility of initiating or paying the same dividends in two consecutive years for firms is more likely to happen in an upturn. Dividend payments are significantly and negatively related to leverage, attesting to the fact that high debt is an important constraining factor for firms in paying dividends. In sum, dividend policy of firms depends on firm-level factors as well as business cycle considerations.

Full Text

     

Saibal Ghosh ¹

Affiliations
1 Department of Economic Analysis and Policy, Reserve Bank of India, Central Office Building, Fort, Mumbai 400001, IN

Abstract

In recent years, there is increasing emphasis on depositor discipline as a mechanism to augment Government oversight (discipline) of the financial sector, specifically depository institutions. Despite the abundance of empirical research on this score, limited theoretical analysis has been forthcoming on the issue. The paper develops a model that incorporates the twin features of depositor discipline and regulatory structure and examines the effects of several parameters on the optimal decision-making process of the bank. These findings are related to the on-going process of economic reforms in India.

Full Text