Abstract
This study examines the determinants of dividend policy of Pakistani banking sector from 2005 to 2015. By employing panel data techniques, the results of this study reveal that profitability, investment opportunities and last year dividend have significant positive effect on dividend payouts of Pakistani banks whereas growth and loan deposit ratio have significant negative influence. Moreover, the results of this study also highlight that last year dividend paid is the most significant factor affecting the dividend payout ratio of the banks. The results also reveal that there is no significant difference in the factors affecting dividend payout ratio before and after the financial crisis. Moreover, switch from Basel II to Basel III accord capital regulations did not have significant effect on the dividend policy of the Pakistani banks. Findings of the study support to dividend smoothing hypothesis, life cycle theory, signaling theory and pecking order theory.