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Influencing Factors of Stock Price in Nepal: Vol. 4, No. 1

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Bimal Prajapati

This paper explores factors influencing stock prices of commercial banks in Nepal listed on the Nepal Stock Exchange from 2008 to 2018. Through questionnaires and financial statements, the study found earnings per share, dividend per share, effective rules and regulations, and company profiles had a significant positive association with stock price, while interest rates and price-to-earnings ratios had a significant inverse association. Accessibility of liquidity and fundamental/technical analysis also impacted the Nepalese stock market performance. In particular, stock prices responded significantly to changes in dividends and interest rates. The banking sector represented over half of the total market capitalization on the Nepal Stock Exchange, making the movements of commercial bank stock prices an important determinant of overall market movements.

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Influencing Factors of Stock Price in Nepal: Vol. 4, No. 1

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Bimal Prajapati
95 views1 page
This paper explores factors influencing stock prices of commercial banks in Nepal listed on the Nepal Stock Exchange from 2008 to 2018. Through questionnaires and financial statements, the study found earnings per share, dividend per share, effective rules and regulations, and company profiles had a significant positive association with stock price, while interest rates and price-to-earnings ratios had a significant inverse association. Accessibility of liquidity and fundamental/technical analysis also impacted the Nepalese stock market performance. In particular, stock prices responded significantly to changes in dividends and interest rates. The banking sector represented over half of the total market capitalization on the Nepal Stock Exchange, making the movements of commercial bank stock prices an important determinant of overall market movements.

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This paper explores factors influencing stock prices of commercial banks in Nepal listed on the Nepal Stock Exchange from 2008 to 2018. Through questionnaires and financial statements, the study found earnings per share, dividend per share, effective rules and regulations, and company profiles had a significant positive association with stock price, while interest rates and price-to-earnings ratios had a significant inverse association. Accessibility of liquidity and fundamental/technical analysis also impacted the Nepalese stock market performance. In particular, stock prices responded significantly to changes in dividends and interest rates. The banking sector represented over half of the total market capitalization on the Nepal Stock Exchange, making the movements of commercial bank stock prices an important determinant of overall market movements.

Copyright:

© All Rights Reserved
Download as PDF, TXT or read online from Scribd
Download as pdf or txt
95 views1 page

Influencing Factors of Stock Price in Nepal: Vol. 4, No. 1

Uploaded by

Bimal Prajapati
This paper explores factors influencing stock prices of commercial banks in Nepal listed on the Nepal Stock Exchange from 2008 to 2018. Through questionnaires and financial statements, the study found earnings per share, dividend per share, effective rules and regulations, and company profiles had a significant positive association with stock price, while interest rates and price-to-earnings ratios had a significant inverse association. Accessibility of liquidity and fundamental/technical analysis also impacted the Nepalese stock market performance. In particular, stock prices responded significantly to changes in dividends and interest rates. The banking sector represented over half of the total market capitalization on the Nepal Stock Exchange, making the movements of commercial bank stock prices an important determinant of overall market movements.

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Vol. 4, No.

Influencing Factors of
Stock Price in Nepal
Krishna Bahadur Thapa
Lecturer
Nepal Commerce Campus, Faculty of Management, T.U.

Abstract
This paper explores the influencing factors of stock price in Nepal (with reference
to Nepalese commercial banks) listed on the Nepal Stock Exchange Ltd. over the
period of 2008 to 2018AD. The information were collected from questionnaire
and financial statement of concerned organizations and analyzed using simple
linear regression model. The conclusions of the work revealed that earning per
share (EPS), dividend per share (DPS), effective rules and regulations, market
whims and rumors, company profiles and success depend upon luck have the
significant positive association with share price while interest rate (IR) and price
to earnings ratio (PER), showed the significant inverse association with share
price. Further, accessibility of liquidity, fundamental and technical analysis
stimulates the performance of the Nepalese stock market. More importantly,
stock market has been found to respond significantly to changes in dividend and
interest rate.
Key words: Stock price, Dividend, Interest Rate, Earning per Share, Capital
Market

Introduction
This paper deals with the affecting factors of stock price of commercial banks on the basis of financial
statements and other economic situations in Nepalese context. The overall aim of this paper is to examine
the impact of the internal as well as external factors on stock prices to Nepalese commercial banks. It
examines the determinants of stock price of commercial banks listed on the Nepal Stock Exchange Ltd.
over the period of 2008 to 2017 AD.
The stock price is used to be fluctuated time to time and the extent of volatility changes over time.
What factors are responsible for these changes in the stock price? Every person specially related with capital
market in this or that way, tries to get answer to these questions. In particular, the recent great stock market
crashes poses particular challenges to economic and statistical models. During last few decades, there have
been elaborated efforts to build models that explicitly allow for large market movements (Eraker, 2004).
There are 9 sectors and 196 stock listed in the NEPSE and the paper has calculated the market
capitalization sector wise. The paper has considered the latest total listed shares and current market price
for calculating Market Capitalization. The total market capitalization on NEPSE is Rs. 1786360 million in
nine different NEPSE sectors, among them Banking sector has the highest market capitalization Rs. 941590
million which covers 52.71% of total market capitalization (NEPSE 2018). Therefore, the movement of
NEPSE depends on the movement stock price of banking sector. Hence, this article proves more relevant.
Further, the coverage of this paper to address all the Nepalese commercial banks listed in the NEPSE is
more justified.
Volatile movements of stock price are normal phenomenon. Even when the time and situations are

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