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Review Article
Factors Affecting Dividend Decisions in Ethiopian Private Commercial Banks: A Systematic Literature Review
Solomon Terfasa Dinka*
,
Deresse Mersha Lakew
Issue:
Volume 11, Issue 6, December 2025
Pages:
121-128
Received:
19 September 2025
Accepted:
30 September 2025
Published:
3 December 2025
Abstract: This systematic literature review examines existing research on Dividend Decisions among private commercial banks in Ethiopia, aiming to identify critical research gaps and evaluate the current state of knowledge to offer guidance for future investigations. The review included sixteen relevant scholarly articles, primarily gathered through open search engines and databases, and followed the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) framework with clearly defined inclusion and exclusion criteria, ensuring methodological rigor. Findings reveal several significant limitations. Most studies focus on a narrow range of internal financial variables, yielding low citation rates, which suggests a nascent field with limited cumulative knowledge. A predominant reliance on quantitative research methods, typically employing econometric models, highlights a substantial gap in qualitative studies. These could provide deeper, invaluable insights into managerial perspectives, strategic rationales, and the nuanced human factors driving dividend decisions, offering a more holistic understanding. While internal factors like profitability, liquidity, and leverage are emphasized, there is a marked lack of attention to broader macroeconomic variables-such as inflation, interest rates, or central bank regulations-that influence banks' dividend policies and risk appetites. Furthermore, some variables investigated yield conflicting results, leading to ambiguity regarding how banks make dividend decisions and the factors shaping their corporate financing behaviors. This inconsistency hinders the development of robust theoretical frameworks and practical guidelines. Therefore, the review strongly suggests that future research integrate qualitative methodologies to capture managerial insights and explore the strategic dimensions of dividend decision-making. Concurrently, it advocates for a broader inclusion of macroeconomic perspectives to better understand contextual influences. By addressing these identified gaps, future studies can significantly enhance comprehension of the complexities influencing dividend policies in Ethiopian private commercial banks, thereby informing both academic inquiry and practical decision-making for the banking sector.
Abstract: This systematic literature review examines existing research on Dividend Decisions among private commercial banks in Ethiopia, aiming to identify critical research gaps and evaluate the current state of knowledge to offer guidance for future investigations. The review included sixteen relevant scholarly articles, primarily gathered through open sea...
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Research Article
Dynamic Determinants of Bank Profitability in Cambodia: Evidence from Panel Var Analysis
Dy Davuth*,
Manaranjan Behera
Issue:
Volume 11, Issue 6, December 2025
Pages:
129-142
Received:
10 November 2025
Accepted:
25 November 2025
Published:
17 December 2025
Abstract: This study investigates the dynamic determinants of bank profitability in Cambodia using a Panel Vector Autoregression (PVAR) framework covering commercial banks from 2010 to 2024. Profitability—measured through Return on Equity (ROE), Return on Assets (ROA), and Profit Margin (PM)—is examined as a systemic outcome shaped by interactions with credit risk (Non-Performing Loans (NPLs)), intermediation efficiency (Net Interest Margin, NIM), and capital strength (Capital Adequacy Ratio, CAR), alongside funding structure and operational efficiency. Descriptive evidence shows that Cambodian banks remain moderately profitable but face rising cost pressures and uneven risk governance. Correlation patterns confirm profitability’s sensitivity to credit quality, cost efficiency, and capital buffers. Panel Vector Autoregression (PVAR) estimation reveals that profitability is highly persistent, with strong positive effects from lagged returns, interest margins, and capitalization, while higher NPLs and elevated cost-to-income ratios significantly depress earnings. Liquidity and deposit-based funding provide stability but generate diminishing marginal returns when excessive. Impulse Response Functions highlight that credit-risk shocks have immediate and persistent negative effects on profitability, whereas capital and liquidity shocks initially stabilize returns before gradually tapering. Forecast Error Variance Decomposition shows that NPLs, CAR, and NIM are the dominant drivers of profitability dynamics, emphasizing the centrality of risk control, capital adequacy, and pricing strength. A sectoral extension shows that lending to agriculture contributes positively to net profit, while exposure to mining, retail trade, and telecommunications reduces profitability due to volatility, narrow margins, and high capital intensity. Granger-causality tests reinforce that credit risk, capital buffers, and liquidity positions predict future profitability more strongly than the reverse. Overall, the results demonstrate that durable bank profitability in Cambodia depends not on balance-sheet expansion alone but on prudent credit-risk management, efficient intermediation, disciplined cost control, and targeted sectoral lending. These findings offer practical insights for bank executives and policymakers seeking to strengthen financial stability and optimize risk-adjusted returns in an evolving banking landscape.
Abstract: This study investigates the dynamic determinants of bank profitability in Cambodia using a Panel Vector Autoregression (PVAR) framework covering commercial banks from 2010 to 2024. Profitability—measured through Return on Equity (ROE), Return on Assets (ROA), and Profit Margin (PM)—is examined as a systemic outcome shaped by interactions with credi...
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Research Article
Keeping It Simple: The Disappearance of Premia for Standard Non-Market Factors
Avanidhar Subrahmanyam*
Issue:
Volume 11, Issue 6, December 2025
Pages:
143-146
Received:
21 September 2025
Accepted:
13 November 2025
Published:
19 December 2025
DOI:
10.11648/j.ijfbr.20251106.13
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Views:
Abstract: There is some confusion surrounding premia commanded by standard stock market factors. Some research attributes the factors to risk and some other research considers them to be a manifestation of mispricing. This note tries to resolve this confusion. My position is that the premia for factors that are priced should remain stable over time, as there is no reason for investors to stop pricing risk. Conversely, unstable premia that trend downward over time suggest mispricing being arbitraged away. The paper considers premia for five well-known factors based on accounting and market capitalization data, and two factors based on past returns, together with the excess market return. Amongst these eight standard and popular factors, only the profitability and market factors yield a reliable non-zero premium over the last 25 years. Factors based on value, size, real investment, short- and long-term reversal, and momentum, all fail to command significant non-zero premia. The evidence therefore suggests that the original in-sample premia for these factors were driven by mispricing, rather than genuine risk pricing. As time goes on, we would expect much the same to happen to the profitability anomaly. The evidence is supports adaptive market efficiency, that is, inefficiencies disappear once discovered.
Abstract: There is some confusion surrounding premia commanded by standard stock market factors. Some research attributes the factors to risk and some other research considers them to be a manifestation of mispricing. This note tries to resolve this confusion. My position is that the premia for factors that are priced should remain stable over time, as there...
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Research Article
Optimal Wealth Allocation to Interest-Bearing Central Bank Digital Currency in Investor Portfolios: A Merton Model Approach
Michael Ochieng Obuya*,
Samuel Owino Onyuma
Issue:
Volume 11, Issue 6, December 2025
Pages:
147-162
Received:
29 September 2025
Accepted:
12 November 2025
Published:
19 December 2025
DOI:
10.11648/j.ijfbr.20251106.14
Downloads:
Views:
Abstract: Floating interest Central Bank Digital Currency (CBDC) is a moderately risky financial asset. Given the risks involved and the returns attached, a rational investor has to determine the optimal allocation of wealth to the CBDC in his or her portfolio. The paper sought to establish the optimal wealth allocation to a floating interest rate CBDC and a risk-free asset. The study adopted an analytical design to illustrate the theoretical optimal holding of floating interest rate CBDC by individual investors based on Merton's 1969 mathematical model. Using data collected from the Central Bank of Kenya and Kenya National Bureau of Statistics, the paper applied the Merton model to a hypothetical proxy for CBDC, and real-world data on inflation, interest, and 91-day T-bill, to allocate investors' wealth to floating interest CBDC and a risk-free asset. The results show that optimal wealth allocation to floating interest rate CBDC was a function of the risk premium, the degree of investor risk aversion and the volatility of the floating interest rate CBDC. The results further demonstrate that whenever CBDC offered a higher interest rate than a risk-free asset, investors would shift wealth to CBDC and vice versa. Further, whenever the volatility on CBDC returns increased, investors tended to hold fewer units of interest-bearing CBDCs and more of risk-free assets and vice versa. The optimal monthly consumption for the risk-averse investor was a function of subjective discounting rate, degree of investor risk aversion and previous wealth. A higher subjective discounting rate or a higher cumulative wealth, or a lower risk aversion was associated with increased optimal consumption, ceteris paribus, and vice versa is true. Our results therefore suggest that financial markets investment portfolios are sensitive to CBDC volatility, and this that can originate another strand of CBDCs literature. These findings provide useful insights to individual and institutional investors, and can guide policymakers and financial market regulators on the important link between CBDC and financial markets in the new digital-currency era. For example, policymakers and regulators can adjust fiscal and monetary policy by considering the possible impact on investor portfolios. This can guide investors to strategically adjust their portfolio positions.
Abstract: Floating interest Central Bank Digital Currency (CBDC) is a moderately risky financial asset. Given the risks involved and the returns attached, a rational investor has to determine the optimal allocation of wealth to the CBDC in his or her portfolio. The paper sought to establish the optimal wealth allocation to a floating interest rate CBDC and a...
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