Future Business Journal (Nov 2023)

Dividend policy framework and bank risk-taking in Africa: do women inclusion in governance system offer new insight?

  • Daniel Ofori-Sasu,
  • Gloria Clarissa Dzeha,
  • Vera Ogeh Fiador,
  • Joshua Yindenaba Abor

DOI
https://doi.org/10.1186/s43093-023-00264-7
Journal volume & issue
Vol. 9, no. 1
pp. 1 – 17

Abstract

Read online

Abstract This study examines the role of women included in governance system in explaining the impact of dividend policy framework on the risk-taking of banks, using a panel dataset of 52 African countries over the period, 2006–2020. The empirical outcome confirms that independent women on the board has a lower probability of paying dividend, reduce dividend yield and induce less risk-taking of banks while women in country-level governance position seek to protect the interest of shareholders and subsequently increase the likelihood of dividend payments and risk-taking of banks. The study found that banks that pay dividends face stricter market discipline, which in turn reduces banks' risk-taking. The study found that dividend policy framework generally acts as a complement for risk-taking when independent women are included in corporate boards while it acts as a substitute control device for banks’ risk-taking when women are included in country-level governance positions. Based on the net effects, the study found robust and strong evidence to support that the dividend policy framework reduces the risk-taking at higher level of women included in governance system.

Keywords