DIVIDEND POLICY EFFECT ON STOCK PRICE OF COMMERCIAL BANKS IN NEPAL

Abstract

This research examines the relationship between investments and the financial performance of commercial banks in Nepal .With its pivotal role in promoting capital formation and maintaining economic growth, the equity market has emerged as a crucial marketplace. Because they guarantee the flow of resources to the most profitable investment opportunity, they are crucial for economic growth. Therefore, this study identifies and analyzes the factors affecting stock price of Nepalese commercial banks in Nepal. The study was conducted using secondary data and information gathered from Nepal Rastra Bank's bank supervision report and the annual reports of a few selected commercial banks. A descriptive and informal comparative research design was used for the study. Twelve commercial banks—NABIL, NMB, EBL, HBL, SCB, GIBL, NICA, NIBL, PCBL, NBL, KBL, and SBL were chosen for the study between 2012/13 and 2021/22. MPS is regarded as a dependent variable for the purposes of the study, whereas firm-specific variables (EPS, DPS, BVPS, DPR, and SIZE) are regarded as independent variables. A positive and significant relationship with each of the previously mentioned independent variables was found through the use of different modules in the analysis. My result was verified as accurate and true among them. Thus, the main finding of this study is that company-specific and macroeconomic factors influence the market prices of Nepalese commercial banks. Company-specific factors such as earnings per share (EPS), book value per share (BVPS), divided per share (DPS) and size play an important role in stock price determination. Dividend per share has been found to be the most significant factor influencing share prices among these. This implies that the stock price will increase in proportion to the dividend per share. Because of this, when investing in the share market, Nepalese investors are cautious about dividends.