Dividend policy and share price volatility: evidence from Nepalese commercial banks / Rakhi Jha 

Public ISBD Title : Dividend policy and share price volatility: evidence from Nepalese commercial banks Material Type: printed text Authors: Rakhi Jha, Author Publication Date: 2014 Pagination: 80p. Size: GRP/Thesis Accompanying material: 2/B General note: Including Bibliography Languages : English Descriptors: Banks and banking Dividend policy Dividends Share-Price Keywords: 'dividend policy  share price volatility  banking  dividends  share' Class number: 650 Abstract: The study on dividend policy and share price volatility: evidence from Nepalese commercial banks provides an important insight into the understanding of share price behavior in Nepal stock market. This study basically aimed at examining the volatility in share price with respect to banks specific variables and also attempted to evaluate the causal relationship between dividend policy and share price volatility in Nepalese stock market. The main purpose of this study is to know relationship between share price volatility and dividend yield, dividend payout, capital, earnings, asset quality, net interest margin, investment, size, debt, return on equity and return on assets. However, the specific objectives of the study are: (a) to analyze whether the current dividend policy should be maintained or changed, (b) to examine the investor‟s preference towards dividend payment, (c) to analyze the uniformity with regards to behaviors in dividend distribution of Nepalese Commercial banks, (d) to analyze the relationship between dividend and market price of share, (e) to identify the relationship between price volatility and financial performance of Nepalese commercial banks, (f) to examine the effects of bank specific variables on price volatility. The proposed study could be used by researchers, policy makers, and mangers to examine and understand share price volatility and dividend policy in Nepalese context. The sample was selected through purposive sampling method. A structured, self administered questionnaire was used to collect data from the respondents. Descriptive statistics including frequencies, percentages, mean and standard deviation were used to describe variable characteristics while inferential statistics (correlation and regression) were used to determine and explain variable relationships. The multiple regression models are used to check the relationship between dependent and independent variables. This study employs panel data techniques to measure the relation between price volatility with dividend yield, dividend payout, capital, size, net interest margin, investment, debt, return on assets, return on equity and earnings volatility for a sample of 20 commercial banks for the period of 2007-2011. For this we are selecting 20 commercial banks of Nepal containing 100 observations. VIII The study results showed that price volatility is positively correlated with dividend payout, size of the firm, investment, return on assets and return on equity whereas, negatively correlated with dividend yield, capital, net interest margin, and debt and earnings volatility. The coefficient of dividend yield and size is positive with price volatility. The coefficient of dividend payout, capital, net interest margin, investment, debt, return on assets, and return on equity and earnings volatility is negative with price volatility. Further this study found that stable dividend policies should be followed by the commercial banks. If the company has no cash to pay dividends then company should pay stock dividends. Hence, current trading price of shares in the market is moderate. Lack of buying and selling behavior of investors is responsible for the lack of development of Nepalese stock market. On the basis of earnings dividend declaring firms have more shareholders and their share value is high. On the basis of financial performance firm should not pay dividends if profitable investments. Stable dividend at present level is recommended for Nepalese commercial banks. Share prices are more volatile (volatile: ups and downs) than expected dividends. In sum up, the major findings of this study can add value to the existing literature. It may help decision makers at bank to focus on major banking activities that may increase the stock price or may decrease the stock price volatility with other competitive banks. This may also help management of commercial bank in creating appropriate strategies for attaining the least share price volatility in Nepalese stock market. Dividend policy and share price volatility: evidence from Nepalese commercial banks [printed text] / Rakhi Jha, Author . - 2014 . - 80p. ; GRP/Thesis + 2/B. Including Bibliography Languages : English Descriptors: Banks and banking Dividend policy Dividends Share-Price Keywords: 'dividend policy  share price volatility  banking  dividends  share' Class number: 650 Abstract: The study on dividend policy and share price volatility: evidence from Nepalese commercial banks provides an important insight into the understanding of share price behavior in Nepal stock market. This study basically aimed at examining the volatility in share price with respect to banks specific variables and also attempted to evaluate the causal relationship between dividend policy and share price volatility in Nepalese stock market. The main purpose of this study is to know relationship between share price volatility and dividend yield, dividend payout, capital, earnings, asset quality, net interest margin, investment, size, debt, return on equity and return on assets. However, the specific objectives of the study are: (a) to analyze whether the current dividend policy should be maintained or changed, (b) to examine the investor‟s preference towards dividend payment, (c) to analyze the uniformity with regards to behaviors in dividend distribution of Nepalese Commercial banks, (d) to analyze the relationship between dividend and market price of share, (e) to identify the relationship between price volatility and financial performance of Nepalese commercial banks, (f) to examine the effects of bank specific variables on price volatility. The proposed study could be used by researchers, policy makers, and mangers to examine and understand share price volatility and dividend policy in Nepalese context. The sample was selected through purposive sampling method. A structured, self administered questionnaire was used to collect data from the respondents. Descriptive statistics including frequencies, percentages, mean and standard deviation were used to describe variable characteristics while inferential statistics (correlation and regression) were used to determine and explain variable relationships. The multiple regression models are used to check the relationship between dependent and independent variables. This study employs panel data techniques to measure the relation between price volatility with dividend yield, dividend payout, capital, size, net interest margin, investment, debt, return on assets, return on equity and earnings volatility for a sample of 20 commercial banks for the period of 2007-2011. For this we are selecting 20 commercial banks of Nepal containing 100 observations. VIII The study results showed that price volatility is positively correlated with dividend payout, size of the firm, investment, return on assets and return on equity whereas, negatively correlated with dividend yield, capital, net interest margin, and debt and earnings volatility. The coefficient of dividend yield and size is positive with price volatility. The coefficient of dividend payout, capital, net interest margin, investment, debt, return on assets, and return on equity and earnings volatility is negative with price volatility. Further this study found that stable dividend policies should be followed by the commercial banks. If the company has no cash to pay dividends then company should pay stock dividends. Hence, current trading price of shares in the market is moderate. Lack of buying and selling behavior of investors is responsible for the lack of development of Nepalese stock market. On the basis of earnings dividend declaring firms have more shareholders and their share value is high. On the basis of financial performance firm should not pay dividends if profitable investments. Stable dividend at present level is recommended for Nepalese commercial banks. Share prices are more volatile (volatile: ups and downs) than expected dividends. In sum up, the major findings of this study can add value to the existing literature. It may help decision makers at bank to focus on major banking activities that may increase the stock price or may decrease the stock price volatility with other competitive banks. This may also help management of commercial bank in creating appropriate strategies for attaining the least share price volatility in Nepalese stock market.

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Barcode	Call number	Media type	Location	Section	Status
29/D	332.1 JHA	Thesis/Dissertation	Uniglobe Library	Social Sciences	Available

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