Factors influencing share price of listed commercial banks in Sri Lanka

Aim of the study is to examine the factors influencing share prices of listed domestic commercial banks in Sri Lanka. A sample of ten domestic banks have selected to carry out the study for the period 2011–2015. Present study considered both internal factors such as earnings per share, dividend per share and bank size and external factors such as interest rate, inflation and exchange rate to investigate the factors influencing on share prices using pooled OLS regression analysis. The results of the study revealed that earnings per share, dividend per share and bank size have significantly positively influenced on share prices of listed domestic banks in Sri Lanka while none of the external factors show any significant influence on share prices of listed commercial banks in Sri Lanka. The findings of the study suggests that investors can make optimum investment decisions in order to maximize their profits and be assured greater returns if they consider these determinants which have evolved to be the substantial contributors to the market price of shares in Sri Lanka.