JIMS8M The Journal of Indian Management & Strategy
Web of Science
  • Year: 2022
  • Volume: 27
  • Issue: 4

Determinants of stock returns of Indian Banks: An evidence of balanced panel regression

1Assistant Professor, Indian Institute of Foreign Trade, Kakinada

2Research Scholar, Department of Commerce, Kurukshetra University, Kurukshetra

3Professor, Department of Commerce, Kurukshetra University, Kurukshetra

Online Published on 16 January, 2023.

Abstract

The stock performance of commercial banks in emerging market like India could be subjected to the risk involved in it and their prime significance to the nation. This paper examines the impact of return on assets (ROA), earnings per share (EPS), leverage and size on stock return of select Banks in India.

We employ balanced panel regression based on 10 years ofpanel data extending from 2010 to 2020 of 27. For the sample, 27 Indian banks are considered in which 11 are public and 16 are private banks.

It is found that ROA and EPS are significant under fixed effect model while ROA is only significant variable to affect stock return in random effect model. To decide the consistency in the model, further, Hausman specification test is employed. The result infers that fixed effect model is an appropriate model.

Very few studies are witnessed on Indian banks specifically from determinants are concerned. This paper provides implications to the policy makers, fund managers and investors to decide about investment strategy in banking sector.

Keywords

Stock Return, Earning Per share, Return on Assets, Leverage, Size, Panel Data