The mediating role of the digitized trading system in dividend payout policy and banking performance

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Abstract

Digital transformation (DT) plays an essential role in banking performance. Through assisting banks in reaching more clients and investors. However, since there is a gap in the literature about the relationship of digital trading systems along with dividend policies and banks’ performance, the current paper seeks to answer whether the digital trading system mediates the Granger causalities of dividends along with the performance of listed banks in Jordan, from January 2013 to December 2024. Therefore, error correction model (ECM) findings revealed that banks’ performance (measured through market capitalization, index of Z-score index, and stock price growth) is significantly related to dividend payout policy, over the long run. It is also found that trading electronically is significant in mediating Granger causality between dividends and market capitalization. Moreover, since banks’ decisions regarding paying dividends improve the activity of digital trading, it is concluded that the digital trading system plays an important role in improving banks’ performance. Moreover, the study recommends that investors rely on dividend payout policy and trading activity to make more valuable and accurate investment decisions.

Keywords: Banks’ Performance, Dividend Payout Policy, Digital Trading Activity, Market Capitalization, Dividend Payout Decision

Authors’ individual contribution: Conceptualization — M.S.A.; Methodology — M.S.A.; Software — M.S.A.; Formal Analysis — M.S.A.; Investigation — M.S.A.; Resources — M.S.A.; Data Curation — M.S.A.; Writing — Original Draft — M.S.A.; Writing — Review & Editing — S.A. and M.H.; Supervision — M.S.A.; Project Administration — S.B. and M.A.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: C8, G0, G1, G3, G4

Received: 15.04.2025
Revised: 25.07.2025; 28.08.2025; 21.10.2025
Accepted: 29.10.2025
Published online: 30.10.2025

How to cite this paper: Ali, M. S., Alabdulatif, S., Baqader, S., Hariri, M., & Alataibi, M. (2025). The mediating role of the digitized trading system in dividend payout policy and banking performance. Business Performance Review, 3(2), 40–48. https://doi.org/10.22495/bprv3i2p4