Stock Price Movement of Nepalese Commercial Banks

Abstract

This study investigates Stock Price Movements of commercial banks in Nepal. The main purpose of this study is to investigate, analysis and interpret the share price movement of Commercial Banks of Nepal. To meet the purpose of the study descriptive and causal comparative research design was used. Seven commercial banks were selected as a sample for the study between the fiscal year 2012/13 to fiscal year 2018/19. Data were obtained from respective commercial banks’ annual report, Nepal Stock Exchange and Security Board of Nepal annual supervision report. Data were analyzed through correlation and multiple regression technique by using SPSS version 25. Variables used were Market price per Share (MPS) as dependent variable and Earnings per Share (EPS), Dividend per Share (DPS), Book Value per Share (BVPS) and Price Earnings Ratio (P/E Ratio) as independent variables. The MPS has positive relation with EPS, P/E ratio and BVPS but has negative relation with DPS. The findings of the study show that there is significant positive correlation between all independent variables (EPS, DPS, BVPS and P/E Ratio) and dependent variable (MPS). Besides this, Earnings, book value, dividend payment, paid up capital, price earnings ratio, and political stability were the determinants of the share price in NEPSE from the respondents of the survey. Finally, the analysis of Nepalese share market, researcher recommends that government should formulate and implement a rigid rules and regulations for the further development of share market. A mechanism to take immediate action against fraud companies is to be established. As a result, Nepalese capital market could be more competitive.