Effect of financial performance on market price of Commercial banks in Nepal

Abstract

ABSTRACT This study investigates the dynamics of stock price behavior among banks listed on the Nepal Stock Exchange, employing a hybrid descriptive and exploratory research design. Utilizing secondary data from the annual reports of major national banks over a decade, the research focuses on the impact of financial indicators such as Return on Assets (ROA), Earnings Per Share (EPS), Book Value Per Share (BVPS), Size per Share, and Dividend Per Share (DPS) on the market price per share (MPS). The analysis, adhering to APA 6th edition standards, employs regression models to explore the intricate relationships between these variables and stock prices across different banking institutions. The introduction of new variables aims to provide a comprehensive understanding of the factors influencing stock price volatility. The findings reveal a complex, variable impact of these indicators on stock prices, highlighting the necessity for a nuanced, context-specific approach to understanding stock price behavior in the banking sector. This study contributes novel insights into the financial underpinnings of stock price volatility and suggests avenues for future research, with significant implications for academics, financial analysts, and policymakers in forecasting, investment decision-making, and regulatory frameworks. The results indicate that EPS and DPS significantly impact stock prices, suggesting market authorities should manage these variables to stabilize the market. Keywords: market price, regression analysis, correlation analysis, commercial banks, financial performance