Factors Affecting Dividend Decisions in Ethiopian Private Commercial Banks: A Systematic Literature Review

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.