From Profit to Payout: Unraveling Financial Influences on Dividend Policy in Indonesian Banks

Abstract

This research investigates how profit growth, leverage measured through DER, profitability assessed via ROA, and liquidity evaluated using LDR influence dividend policy indicated by DPR in Indonesian banking institutions. The central research problem addresses the variability in dividend policy patterns, as reflected in DPR fluctuations, which are influenced by corporate profit growth trajectory, leverage structure, profitability performance, and liquidity management. Employing a quantitative methodology with causal-comparative analysis utilizing secondary financial data, this investigation encompasses 47 banking sector entities registered on the Indonesia Stock Exchange spanning 2019-2023. Through purposive sampling methodology, 11 institutions were identified for detailed examination. Statistical analysis was performed using PLS-SEM methodology via WarpPLS 8.0 software. Research findings demonstrate that profit growth, leverage, and profitability exhibit statistically significant positive correlations with dividend policy formulation, while liquidity shows positive but statistically insignificant influence on dividend policy decisions.