A COMPARATIVE ANALYSIS ON STOCK PRICE BEHAVIOR OF NEPALESE COMMERCIAL BANKS
Date
2024
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Shanker Dev Campus
Abstract
The stock market in Nepal is still in its developmental stages and requires support from
various stakeholders to operate efficiently. It's crucial for the government to establish and
enforce effective regulations to foster the growth of the stock market. Listed companies
play a vital role by adhering to these regulations, promptly disclosing financial
statements, avoiding rumors, and refraining from stock price manipulation. This study
aims to evaluate the behavior of share prices, particularly focusing on the weak efficient
market hypothesis, and determine whether successive price changes are independent or
dependent on historical price changes, with a specific emphasis on the banking sector.
The primary indicator of a company's profitability from the perspective of ordinary
shareholders is the earnings per share (EPS). NABIL boasts the highest EPS at
RS.61.912, while Nepal Investment Bank Limited has the lowest at Rs.33.18. Higher
earnings typically correlate with better performance. However, there's noticeable
fluctuation in dividend per share, with SCBNL offering the highest average dividend of
Rs.50.712, while HBL offers the lowest at Rs.28.424. Investors inclined towards longterm investments often favor companies with higher dividend yields. All banks
demonstrate healthy and positive price-to-earnings (P/E) multiples. However, the
relationship between earnings and price exhibits mixed behavior, emphasizing the need
for firms to strike a balance between dividends and retained earnings. Dividend
distribution plays a crucial role in achieving organizational goals and satisfying
shareholders. Decisions regarding dividends are typically made by the board of directors,
considering factors like the cost of paying dividends versus retaining earnings. The
allocation of profits between dividend payouts and retained earnings significantly impacts
the market value of shares. Therefore, it's imperative for companies to adopt a prudent
policy that aligns with both shareholders' interests and corporate objectives.
Keywords: Market Price Per Share, Dividend Per Share, Price Earnings Ratio, Book
Value Per Share, Return on Assets And Return on Equity