DETERMINANTS OF STOCK PRICE OF NEPALESE COMMERCIAL BANKS

Abstract

This study investigates the determinants of stock price of Nepalese commercial bank. The study is based on the relationship between the Financial Performance Indicators and Stock Price Behavior of Listed Companies in NEPSE. It examines the relationship between the financial performance indicators (EPS, NPL, INT and P/E Ratio) and common stock price (MPS). The main purpose of this study is to investigates, analysis and interpret the Determinants of stock price of Nepalese commercial bank. To meet the purpose of the study descriptive research design was used. Five commercial banks (EBL, SANIMA, NABIL, SBL, SCBL) were selected as a sample for the study between the fiscal year 2013/14 to fiscal year 2022/23. Data were obtained from respective banks annual report, Nepal Stock Exchange and Security Board of Nepal. Data were analyzed through correlation and multiple regression technique by using SPSS version 26. The variables were used Market price per Share (MPS) as dependent variable and Earnings per Share (EPS), Non-Performing Loan (NPL), Interest (INT), and Price Earnings Ratio (P/E Ratio) as independent variables. The MPS has a significant positive correlation with EPS and P/E ratio. The findings of the study also show that coefficients for EPS and P/E Ratio are all significant at p<0.01 level, suggesting that they are important predictors of MPS. Finally, the analysis of Nepalese stock market, researcher recommends that, investors should analyze all the aspects and factors that may affect the price of share before investing in any commercial banks. Also, government should formulate and implement a strict rules and regulations for the further development of stock market. Governments need to make mechanism to take immediate action against insider trading. As a result, Nepalese capital market could be more competitive.