This study analyses cash dividend behavior of a panel dataset of 80 companies traded in the Borsa Istanbul (BIST) - Financials Index for the period 2009‒2016, using Lintner’s (1956) partial adjustment model. The results show that BIST financial firms determine their current cash dividend payments based on current earnings and lagged dividends, in line with Lintner’s proposition. In particular, they have long-term target payout ratios and adjust their cash dividends by moving gradually to their target at a moderate level of speed of adjustment. Therefore, the study concludes that BIST-listed financial corporations follow reasonably stable dividend policies starting with the fiscal year 2009, when Turkish authorities abolished the mandatory dividend payout requirement. Moreover, the results also indicate that various firm characteristics such as profitability, debt, growth and size have different impacts on the target payout ratio and speed of adjustment of companies in the Turkish financial sector.

This study analyses cash dividend behaviour of a panel dataset of 80 companies traded in the Borsa Istanbul (BIST) - Financials Index for the period 2009-2016, using Lintner’s (1956) partial adjustment model. The results show that BIST financial firms determine their current cash dividend payments based on current earnings and lagged dividends, in line with Lintner’s proposition. In particular, they have long-term target payout ratios and adjust their cash dividends by moving gradually to their target at a moderate level of speed of adjustment. Therefore, the study concludes that BIST-listed financial corporations follow reasonably stable dividend policies starting with the fiscal year 2009, when Turkish authorities abolished the mandatory dividend payout requirement. Moreover, the results also indicate that various firm characteristics, such as profitability, debt, growth and size, have different impacts on the target payout ratio and speed of adjustment of companies in the Turkish financial sector.