Abstract
This study investigates whether the dividend policy (the decision to distribute funds, and the distribution channel preferences) of the banking sector of Pakistan is affected during any periods of domestic and global financial crisis. Using a sample of publically listed commercial banks, between the periods of 2002 till 2015, this research document that, unlike other countries, the banks in Pakistan fail to indicate a decline in the level of funds that are distributed to the investors. Even though the importance of the other means of distribution has increased over time, a major portion of the total payout is still covered by the cash dividends. Moreover, the results of the multinomial logit model, demonstrate that the payout policy of the commercial banks listed on the PSX, is not influenced by the global financial crisis. Furthermore, the analysis reveals that more liquid, profitable, and growth oriented banks have a higher tendency to pay dividends, than the other banks that do not fall in this category. The empirical results also indicate that the signaling hypothesis is a relevant economic phenomenon. These findings provide insights to different stakeholders in developing the relevant policies needed to cope up with crisis situations, such as the current ongoing Coronavirus pandemic.
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