The Influence of Bank Risk on the Opportunity of Dividend Policy Changes in Commercial Banks

Abstract

This study aims to analyze the influence of bank risk on the opportunity of dividend policy changes in commercial banks in ASEAN-5, using a sample of 53 banks over the period 2018–2023. Bank risk is measured through variables such as Z-Score, Non-Performing Loans (NPL), and Capital Adequacy Ratio (CAR), with the analysis conducted using binary logistic regression on three categories of dividend changes: dividend increase, dividend decrease, and dividend no-change. The results show that bank risk has a significant negative effect on dividend no-change. This finding is consistent with the signaling dividend theory, which emphasizes the importance of dividends as a signal of financial stability. Bank risk has a positive effect on dividend increase, while capital risk has a positive effect on dividend no-change, in line with the residual theory of dividends, which considers the adequacy of capital as a factor.