Global Economic Uncertainty and Bank Dividend Policy: The Moderating Role of Institutional Ownership in ASEAN

Abstract

This study examines the effect of global economic uncertainty on bank dividend payouts and investigates whether institutional ownership moderates this relationship in ASEAN banking. The study analyzes an annual panel of 45 listed banks from Indonesia, Malaysia, Singapore, Thailand, Philippines, and Vietnam over 2014–2024. Global economic uncertainty is measured using the World Uncertainty Index (WUI), while dividend payouts are captured by the Dividend Payout Ratio (DPR). A two-step System Generalized Method of Moments (System GMM) estimator is employed to address dividend persistence and potential endogeneity. The results show that global economic uncertainty significantly reduces bank dividend payouts, suggesting that banks retain a larger share of earnings when uncertainty increases. Dividend payouts also exhibit significant persistence. Institutional ownership significantly moderates the effect of uncertainty. Specifically, higher institutional ownership mitigates the negative impact of global economic uncertainty on dividends. These findings indicate that institutional investors influence bank payout decisions primarily through a conditional governance mechanism rather than direct control over payout levels. This study contributes to the literature by integrating global uncertainty and ownership structure into a dynamic framework and providing cross-country evidence from the ASEAN banking sector.