<![CDATA[Dividend policy is a strategic financial decision in the banking sector, shaped by strict prudential regulation on capital adequacy and liquidity. This study aims to synthesize prior empirical findings on the effect of profitability and liquidity on dividend policy in the banking sector through a systematic literature review. Ten core studies meeting the inclusion criteria, namely banking-sector research using dividend payout ratio as the dependent variable with profitability and liquidity as independent variables, were analyzed using narrative synthesis. The results show that profitability, proxied by return on assets or return on equity, has a positive and significant effect on dividend policy in seven of ten studies, consistent with Lintner's model and signaling theory. Liquidity, however, shows a far less consistent pattern: six studies report no significant effect, two report a positive effect, and two report a negative effect. This inconsistency is attributed to differences in liquidity proxies, research periods, and bank institutional characteristics. The study concludes that liquidity's dual role as both a dividend-paying capacity indicator and a prudential compliance instrument constrains bank management's discretion in translating liquidity into dividends, distinguishing banking from non-banking sector]]>
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