Analysis of UAE Bank Stocks

Abstract: Listing of stocks on the stock exchange offers business firms several advantages such as diversification, liquidity, establishing a value for the firm etc. The present paper analyses stocks of six commercial banks (viz., Dubai Commercial Bank, Emirates Bank International, National Bank of Dubai, Mashreq Bank, National Bank of Abu Dhabi, and Abu Dhabi Commercial Bank) which constitutes 72% of the capitalisation of the banking sector in UAE. These bank stock prices are analysed for the trend and riskiness. Capital Asset Pricing Model (CAPM) a market equilibrium model is applied to these seven bank’s stocks. The betas of these banks were derived. Stock prices of all banks are found to be under-priced. It was considered that more general models like multi-factor CAPM and arbitrage pricing theory (APT) models could be more appropriate models for analysing the bank stocks due to imperfections in UAE market.

Keywords: UAE Banks; CAPM; Stocks; Financial Markets; Efficiency (search for similar items in EconPapers)
JEL-codes: G12 G14 G21 G24 G32 O16 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cfn
Date: Written 2003-06-07
Note: Type of Document - Windows 2000-Word; prepared on Windows-NT; to print on HP; pages: 17; figures: included. The article wass published in "Economic Horizon" (ISSN-1024-266X) Vol.21.No.82-AH1420-2000(2)
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