DETERMINANTS OF STOCK PRICE OF DEVELOPMENT BANKS IN NEPAL

Abstract

The purpose of this study is to identify the stock prices of development banks in Nepal by investigating, analyzing, and explaining the factors that influence them. The research intends to elucidate the relationship between key financial indicators such as book value per share (BVPS), dividend per share (DPS), earnings per share (EPS), price-to-earnings (P/E) ratio, and the market price per share to book value per share (MPS/BVPS) ratio on the stock prices of these banks. By conducting a comprehensive analysis, the study seeks to provide insights into the dynamics governing the stock market performance of the Nepalese banking sector. This study utilizes Bivariate Correlation and linear multiple regression models to evaluate the effect of these explanatory variables on the dependent variable. Data are gathered from the annual reports of selected development banks, reports from the Nepal Rastra Bank, and various other official and unofficial publications. The analysis uses appropriate financial and statistical tools within a descriptive and causal-comparative research design. The research utilizes data collected from ten development banks listed on the Nepal Stock Exchange (NEPSE) for the fiscal years 2069/70 to 2078/79, employing a convenience sampling method. The data were compiled and analyzed using MS-Excel and SPSS. This study examines the relationship between BVPS, DPS, EPS, the P/E ratio, and the MPS/BVPS ratio on the market prices of Nepalese development banks through descriptive statistics, correlation, and regression analysis.The study concludes that BVPS, DPS, EPS, P/E ratio, and return on equity have a significant positive relationship with market price.