The dynamics of financial performance and market performance in the context of Indian banking industry [version 2; peer review: 1 approved, 2 approved with reservations]
Background This study aims to gain insight into the effect of banks’ financial performance on their market performance. We conceptualized the research subject on the assumption that the financial performance of an organization is the most important criterion for triggering movement in its stock pric...
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F1000 Research Ltd
2025-02-01
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| Online Access: | https://f1000research.com/articles/13-657/v2 |
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| author | Kshirod Panigrahi Ashok Sar |
| author_facet | Kshirod Panigrahi Ashok Sar |
| author_sort | Kshirod Panigrahi |
| collection | DOAJ |
| description | Background This study aims to gain insight into the effect of banks’ financial performance on their market performance. We conceptualized the research subject on the assumption that the financial performance of an organization is the most important criterion for triggering movement in its stock price. We explored various models and parameters to evaluate financial performance of banks and found CAMELS being one of the most comprehensive and appropriate model. We considered share price growth of banks to measure their stock market performance Methods We collected financial and stock market data pertaining to 32 listed Indian banks for the period 2018 to 2022. The study has employed multiple linear regression analysis of panel data for evaluating the relationship between independent and dependent variables. We adopted panel regression for data analysis and used the Prais- Winsten regression with panel corrected standard errors, as the data suffers from contemporaneous cross-sectional correlation. Results The results show that net non-performing assets, net interest margins, and return on capital have a significant negative impact on share price growth. The capital adequacy ratio and the current and savings account deposit ratios have a positive insignificant impact. The liquid asset-to-total asset ratio has a negative, insignificant impact. The coefficient of determination indicates that the share price growth of banks is more dependent on other factors which are not included in the regression analysis of this study. Conclusion This study helps investors and bankers understand the limited impact of financial parameters on banks’stock prices and to look for other parameters which explain the stock price movement better. |
| format | Article |
| id | doaj-art-8d446b87696742ca9eaa4acb12601282 |
| institution | Kabale University |
| issn | 2046-1402 |
| language | English |
| publishDate | 2025-02-01 |
| publisher | F1000 Research Ltd |
| record_format | Article |
| series | F1000Research |
| spelling | doaj-art-8d446b87696742ca9eaa4acb126012822025-02-12T01:00:02ZengF1000 Research LtdF1000Research2046-14022025-02-0113176961The dynamics of financial performance and market performance in the context of Indian banking industry [version 2; peer review: 1 approved, 2 approved with reservations]Kshirod Panigrahi0Ashok Sar1https://orcid.org/0000-0002-7861-9060School of Management, Kalinga Institute of Industrial Technology, Bhubaneswar, Odisha, 751024, IndiaSchool of Management, Kalinga Institute of Industrial Technology, Bhubaneswar, Odisha, 751024, IndiaBackground This study aims to gain insight into the effect of banks’ financial performance on their market performance. We conceptualized the research subject on the assumption that the financial performance of an organization is the most important criterion for triggering movement in its stock price. We explored various models and parameters to evaluate financial performance of banks and found CAMELS being one of the most comprehensive and appropriate model. We considered share price growth of banks to measure their stock market performance Methods We collected financial and stock market data pertaining to 32 listed Indian banks for the period 2018 to 2022. The study has employed multiple linear regression analysis of panel data for evaluating the relationship between independent and dependent variables. We adopted panel regression for data analysis and used the Prais- Winsten regression with panel corrected standard errors, as the data suffers from contemporaneous cross-sectional correlation. Results The results show that net non-performing assets, net interest margins, and return on capital have a significant negative impact on share price growth. The capital adequacy ratio and the current and savings account deposit ratios have a positive insignificant impact. The liquid asset-to-total asset ratio has a negative, insignificant impact. The coefficient of determination indicates that the share price growth of banks is more dependent on other factors which are not included in the regression analysis of this study. Conclusion This study helps investors and bankers understand the limited impact of financial parameters on banks’stock prices and to look for other parameters which explain the stock price movement better.https://f1000research.com/articles/13-657/v2financial performance; stock market performance; capital adequacy ratio ; net non- performing asset ; CASA ratio; return on capital employed; net interest margin ; liquid asset to total asset; growth in share priceeng |
| spellingShingle | Kshirod Panigrahi Ashok Sar The dynamics of financial performance and market performance in the context of Indian banking industry [version 2; peer review: 1 approved, 2 approved with reservations] F1000Research financial performance; stock market performance; capital adequacy ratio ; net non- performing asset ; CASA ratio; return on capital employed; net interest margin ; liquid asset to total asset; growth in share price eng |
| title | The dynamics of financial performance and market performance in the context of Indian banking industry [version 2; peer review: 1 approved, 2 approved with reservations] |
| title_full | The dynamics of financial performance and market performance in the context of Indian banking industry [version 2; peer review: 1 approved, 2 approved with reservations] |
| title_fullStr | The dynamics of financial performance and market performance in the context of Indian banking industry [version 2; peer review: 1 approved, 2 approved with reservations] |
| title_full_unstemmed | The dynamics of financial performance and market performance in the context of Indian banking industry [version 2; peer review: 1 approved, 2 approved with reservations] |
| title_short | The dynamics of financial performance and market performance in the context of Indian banking industry [version 2; peer review: 1 approved, 2 approved with reservations] |
| title_sort | dynamics of financial performance and market performance in the context of indian banking industry version 2 peer review 1 approved 2 approved with reservations |
| topic | financial performance; stock market performance; capital adequacy ratio ; net non- performing asset ; CASA ratio; return on capital employed; net interest margin ; liquid asset to total asset; growth in share price eng |
| url | https://f1000research.com/articles/13-657/v2 |
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