Ownership concentration and dividend distribution decision in a bank: Does competition matter?

This research aims to probe the mutual association between ownership concentration (OC), and the dividend policy (DP) of banks in India. Moreover, the study also determines the influence of competition on OC’s and dividend. Hand-picked data from 24 Indian commercial banks for 13 years (2010-2022) and dynamic panel data econometrics were applied for the empirical data analysis. Both linear and non-linear relationship is determined to better understand the OC’s impact on DP. The study finds a positive relationship between OC and DP. A non-linear positive association is found that until a threshold of OC is reached, OC supports a reduction in the div, which is explained by the theories of incentive and internal control mechanisms. However, as the threshold is reached, OC supports increasing dividends, which is explained by private benefit theory. Additionally, competition did not influence dividend’s promoters (promo). However, institutional investors (ii) support increasing the div in the wake of increasing competition, which explains the outcome agency model of dividend theory. The paper has significant implications for policymakers, managers, and investors. We do not observe any paper reporting the linear, non-linear association and competition as a moderator on the association of OC and div in this sectors.