STOCK PRICE MOVEMENT AND FINANCIAL
PERFORMANCE OF COMMERCIAL BANKS LISTED IN NEPSE
A THESIS
Submitted to:
Office of the Dean
Faculty of Management
Tribhuvan University
By
BINA BASI
Khwopa College
T.U. Regd : 7-2-408-67-2004
Symbol No: 4080003
In the Partial Fulfillment of the Requirement for the Degree of
Master of Business Studies (M.B.S.)
Kathmandu, Nepal
October, 2011
RECOMMENDATION
This is to certify that the Thesis
Submitted by:
BINA BASI
Entitled:
STOCK PRICE MOVMENT AND FINANCIAL PERFORMANCE OF
COMMERCIAL BANKS LISTED IN NEPSE
has been prepared as approved by this Department in the prescribed
format of the Faculty of Management. This thesis is forwarded for
examination.
---------------------------- ------------------------------
Thesis Supervisor Chairman, ResearcCommittee
(Prof. Dr. Shalik Ram Koirala) (Prof. Dr. Shalik Ram Koirala)
---------------------------
College Chief
(Roopak Joshi)
VIVA-VOCE SHEET
We have conducted the viva-voce of the thesis presented
by
BINA BASI
Entitled:
STOCK PRICE MOVEMENT AND FINANCIAL PERFORMANCE OF
LISTED COMPANIES IN NEPSE
And found the thesis to be the original work of the student and written
according to the prescribed format. We recommend the thesis to be accepted as
Partial fulfillment of the requirement for the
Degree of Master’s in Business studies (M.B.S.)
Viva-Voce Committee
Head, Research Department …………………………….
Member (Thesis Supervisor) …………………………….
Member (Thesis Supervisor) …………………………….
Member (External Expert) ..……………………………
Date :
DECLARATION
I hereby declare that the work reported in this thesis entitle “Stock Price
Movement and Financial Performance of Commercial Banks listed in NEPSE”
submitted to Khwopa College, affiliated to Tribhuvan University as per the
requirement in partial fulfillment of Master of Business Studies Faculty of
Management, Tribhuvan University, is my original work undertaken under the
supervision of Prof. Shaligram Koirala.
Bina Basi
[Link] : 7-2-408-67-2004
Date: October, 2011
Acknowledgement
I am encouraged for undertaking the writing of this research from the academic
programme of T.U. in Nepal.
This research has not been only completed by my sole efforts but also well wishers
have made contribution in different ways to complete this research and to bring out it
in this shape.
First of all, I am obliged to my supervisor Prof. Dr. Shalik Ram Koirala Chairman of
the T.U. Research Committee for their generous guidance, valuable comments,
inspiration and encouragement on the preparation of this study. I thanks to my
respected teacher Mr. Roopak Joshi, the principle of Khwopa college.
I would like to thank the library staff of the Nepal Commerce Campus and Khwopa
college for their relentless effort in making access to research data and literature
possible. We are bound to all our lecturers for their motivating efforts in transferring
knowledge.
My appreciation for the encouragement and enthusiastic support I got from my friends
and colleagues in different ways whenever and wherever needed.
My sincere thanks go to my parents for guiding us through life and giving us the
possibility to develop ourselves to the best of our capacity. Without them we would
not have reached this academic level.
Finally, no one is perfect in every walk of life. Therefore, I welcome new suggestions,
comments regarding to this research works from teachers and the users who beneficial
from my data collection.
…………………………….
Bina Basi
Researcher
Khwopa College
Bhaktapur, Nepal
Table of Contents
Subjects Page No.
Recommendation
Viva-voce Sheet
Declaration
Acknowledgement
Abbreviations
List of Tables
List of Figures
CHAPTER I
1. INTRODUCTION
1.1. Background of the study 1
1.2. Securities Market in Nepal: History and Development 4
1.3. Statement of the problem 6
1.4. Objectives of the study 7
1.5. Significance of the study 8
1.6. Limitation of the study 9
1.7. Organization of the study 9
CHAPTER II
2. REVIEW OF LITERATURE
2.1. Introduction 11
2.2. Conceptual framework of Financial Market 11
2.2.1 Financial Market 12
[Link] Money Market 12
[Link]. Capital Market 12
2.2.2. Theory of Price Behaviour 14
[Link]. Inefficient Market Theory 14
[Link] Efficient Market Theory 16
2.2.3 Common Stocks 17
[Link] Value of the Common Stock 18
[Link] Common Stock Valuation 19
2.3. Review of Related Studies 19
2.3.1 Review of Journal and Article 19
2.3.2 Review of Unpublished Thesis 21
2.4 Research Gap 27
CHAPTER III
3. RESEARCH METHODOLOGY
3.1 Background 28
3.2 Research design 28
3.3 Population and Samples of Data 28
3.4 Nature and Sources of data 29
3.5 Data collection Techniques 29
3.6. Data analysis Tools 30
3.6.1. Financial Tools 30
[Link]. Earning Per Share 30
[Link]. Dividend Per Share 30
[Link]. Market Price Per Share 31
[Link]. Book value Per Share 31
[Link]. Holding Period Returns 31
[Link]. Risk and Return Analysis of Market 32
[Link]. Market Sensitivity Analysis 32
3.6.2. Statistical Tools 33
[Link]. Average (Mean) 33
[Link]. Standard Deviation 34
[Link]. Coefficient of Variation 34
[Link]. Correlation Analysis 35
[Link]. Coefficient of Determination 36
[Link]. Probable Error 36
[Link]. Regression Analysis 36
[Link]. Graph 37
[Link]. Research Questions 37
CHAPTER IV
4. DATA PRESENTATION AND ANALYSIS
4.1. Introduction 38
4.2. Analysis of Financial Performance of the Company 38
4.2.1. Earning Per Share 38
4.2.2 Dividend Per Share 40
4.2.3. Market Price Per Share 42
4.2.4. Book Value Per Share 44
4.3. Relationship between EPS, DPS & BPS to MPS 46
4.3.1. Correlation & Regression Analysis of NABIL Bank 46
4.3.2. Correlation & Regression Analysis of BOK Bank 49
4.3.3. Correlation & Regression Analysis of EBL Bank 51
4.3.4. Correlation & Regression Analysis of HBL Bank 53
4.3.5. Correlation & Regression Analysis of SBI Bank 55
4.4. Price Situations of the Stocks of Listed Companies: 57
4.5. Primary Data Analysis and Presentation 59
4.5.1 Classification of Respondents 59
4.6. Major Findings of the study 68
CHAPTER V
5. SUMMARY, CONCLUSION AND RECOMMENDATION
5.1. Summary 70
5.2. Conclusion 71
5.3. Recommendations 72
Bibilography
Appendix
LIST OF TABLES
Table No. Title of Tables Page No.
4.1. Earning Per share of Concern Banks 39
4.2. Dividend Per share of Concern Bank 42
4.3. Market Value Per share of Concern Banks 43
4.4. Book Value Per share of Concern Banks 45
4.5. Relationship of EPS, DPS and BVPS with MPS of NABIL 47
4.6 Relationship of EPS, DPS and BVPS with MPS of BOK 49
4.7 Relationship of EPS, DPS and BVPS with MPS of EBL 51
4.8 Relationship of EPS, DPS and BVPS with MPS of HBL 53
4.9 Relationship of EPS, DPS and BVPS with MPS of SBI 55
4.10. Price situation of common stock of listed companies 57
4.11 Classification of Respondents 59
4.12 Number of Respondents holding the share in share market 59
4.13 Reasons of holding the share in share market 60
4.14 Reasons for not holding the share in share market 60
4.15 No. of Respondents on Volatility in share price 61
4.16 Factors for share Volatility 61
4.17 No. of Respondents on Prediction of Future share price 62
4.18 Factors to predict the future share price 63
4.19 No. of Respondents to increase net profit 63
4.20 Measure to increase Net profit 64
4.21 No. of Respondents on Reduction of share price 64
4.22 Factors for share price Reduction 65
4.23 No. of Respondents knowing on Dividend Distribution 66
4.24 Reasons for Dividend Distribution 66
4.25 No. of Respondents investing in Secondary Market 67
4.26 Factors for decision taking 67
4.27 No. of Respondents not investing in secondary market 68
LIST OF FIGURES
Fig. No. Title of Figure Page No.
4.1 Earning per share of Concern Banks 40
1.2 Dividend per share of Concern Banks 42
4.3. Market Value per share of Concern Banks 44
4.4. Book Value per share of Concern Banks 46
4.5. Relationship of EPS, DPS and BVPS with MPS of NABIL 48
4.6 Relationship of EPS, DPS and BVPS with MPS of BOK 50
4.7. Relationship of EPS, DPS and BVPS with MPS of EBL 52
4.8. Relationship of EPS, DPS and BVPS with MPS of HBL 54
4.9. Relationship of EPS, DPS and BVPS with MPS of SBI 56
ABBREVIATIONS
EBL : Everest Bank Limited
HBL : Himalayan Bank Limited
BOK : Bank of Kathmandu
NABIL : Nepal Arab Bank Limited
SBI : Nepal SBI Bank Limited
SEBON : Security Board of Nepal
NEPSE : Nepal Stock Exchange
NRB : Nepal Rastra Bank
EPS : Earning Per Share
DPS : Dividend Per Share
MPS : Market Price Per Share
BVPS : Book Value Per Share
P.E. : Probable Error
F.Y : Fiscal Year
IPO : Initial Public Offering
r2 : Coefficient of Determination
r : Coefficient of Correlation
C.V. : Coefficient of Variation
& : And
i.e. : That is
S.N. : Serial Number
Rs. : Rupees
