An Analysis of Share Price Behavior of Commercial Banks in Nepal
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Shanker Dev Campus
Abstract
This study is mainly focused on determining the effect of different financial indicators of
commercial banks of Nepal on the market price of those banks. It analyzes how the price
fluctuates with respect to different financial indicators such as EPS, DPS, BVPS, PE and DPR.
For determining such effects or relations, secondary data has been extensively used. Different
statistical and financial tools are employed for the analysis of these parameters. Correlation
analysis has been carried out to determine the strength of relation between dependent and
independent variables. Simple regression analysis and multiple regression analysis has been
done to determine regression equation of the dependent variable on a single and multiple
independent variable respectively. Microsoft Excel has been used as the analysis software.
The results revealed that the correlation between MPS and other financial indicators varies
among different banks. The correlation between MPS and EPS is highest for MBL, while that
between MPS and DPS is highest for EBL. Similarly, correlation of MPS with BVPS and DPR
are highest for EBL and with PE is highest for SCB. The results of simple regression analysis
have been tested by employing t-test, which revealed that there is statistically significant
relationship between MPS and all independent variables.
The multiple regression analysis of all banks combined revealed that EPS and P/E have a
significant effect on the dependent variable, as their t-statistics are large (well above the critical
value) and their p-values are very small. DPS, BVPS and DPR are not statistically significant,
as their p-values are greater than 0.05, indicating they do not have a meaningful impact on the
dependent variable.