Analysis of the determinants of market stock price movements : An empirical study of Nepalese commercial Banks

Abstract

The main objective of this study was to examine the impact of different financial indicators like EPS, DPS, BVPS and P/E ratio stock price of commercial banks in Nepal. To draw out the respective variables effects on share price movement in Nepal and find the effects of variables, this study used secondary data from different sources. The study design was descriptive and analytical research design. Convenience Sampling was used for the study. Necessary secondary data were taken from the annual reports of samples banks of this research. Mean, Standard Deviation, maximum, minimum, correlation coefficients, regression analysis were performed to analyze the secondary data of this study. The results revealed that many of the respondents still believe that there are still lots of influencing variables on share price movements, on the other hand most of cause of the movement of share price by political situation of country, earning per share, dividend distribution patterns, higher book value, share price, rules and regulations of Nepal Rastra Bank, financial aspects.. The study further shows the share price of commercial banks in Nepal is very fluctuating. It is a subject of curiosity to identify the factors affecting share price of commercial banks. The shares of commercial banks dominate the portfolio of majority of investors. So, this study examines the factors affecting share price movement of commercial banks over the period 2011/122020/21.

The findings of the study over the past ten-year period revealed that earnings per share, dividend per share, book value per share and P/E ratios has the significant positive association with share price. There exists significant relationship of EPS, DPS, BVPS and P/E ratio with MPS.

Key Words: Earning per share, dividend per share, book value per share, P/E ratio and market price per share.