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Why would a bank want to monitor the dividend payment practices of the corporations it lends money to?

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Question ajoutée par Muhammad Asif Jajja , Accountant , Pakistan Veterinary Medical Council
Date de publication: 2013/06/21
Md Shahidul Islam
par Md Shahidul Islam , Head of Finance & Accounts , Abdul Monem Limited (Coca-Cola)

Dividend trend or dividend policy is considered as a vital tool to track a companies future strategy and opportunity.
As an investor, this information is very useful to decide whether to hold the stock or sell it now.
As a lender you must have to follow the decision regarding the dividend because it reveals a lot of information about the corporation.
From accounting point of view, dividend may affect the Balance Sheet of a corporation in various ways depending on the scenario or mode of dividend payment.
So, monitoring the dividend payment practices of corporations is very much necessary for the lenders to manage the lending risk properly.