DETERMINANTS OF STOCK PRICES OF BANKING SECTOR WITH REFERENCE TO PRIVATE SECTOR BANKS

Neeraj Aswal and Sudhi Sharma
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Neeraj Aswal: ICFAI LAW SCHOOL,THE ICFAI UNIVERSITY, DEHRADUN
Sudhi Sharma: APEEJAY SCHOOL OF MANAGEMENT, DWARKA, NEW DELHI

Annals - Economy Series, 2020, vol. 5, 5-14

Abstract: As financial intermediaries banks play an important role in the operations of an economy. Over the years private banks are gaining market share by providing solutions which people are not able to get from public sector banks. This is also visible in numbers as number of accounts, credit off take, Current Account and Saving Account (CASA) deposits have been growing over the years. Lastly the main issue of Net performing assets(NPA) has also been addressed by private sector banks. Over the years the NPA level has been low which clearly shows that prudent lending practices by private sector banks have rewarded not just banks but also stakeholders.It has been very well captured the on-going shift of people trust from public banks to private sector banks. The paper examines the determinants of private sector banks in India for the years 2010 to 2019. A sample of 15 banks in the private sector has been taken. Descriptive Analysis, Correlation and regression using panel data modelling has been performed. Share Returns has been taken as the dependent variable while other variables as Dividend per Share (DPS), Return on Equity (ROE), Price to Book (P/BV), Net interest margin (NIM), Capital Adequacy Ratio (CAR), Net non-Performing Assets to Net Advances (NPA to NA) are independent variables. The results show that independent variables are significant variables in affecting the profitability of banks in the private sector of Indian economy. It is also suggested that if banks concentrate on these variables, they would be able to generate better profitability and high returns for shareholders.

Keywords: Capital Adequacy Ratio; Price to Book; Net NPA to NPA Advances; Return on Equity; Dividend per Share; Net Interest Margin (search for similar items in EconPapers)
Date: 2020
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