The Relationship between bank performance and market returns in listed banks in Kenya

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dc.contributor.authorNdegwa, John
dc.date.accessioned2018-11-01T12:44:54Z
dc.date.available2018-11-01T12:44:54Z
dc.date.issued2018
dc.descriptionSubmitted in partial fulfillment of the requirements for the Degree of Master of Business Administration at Strathmore Universityen_US
dc.description.abstractThe aim of this study was to examine the relationship between bank financial performance and stock price returns. The paper serves to address the gap in expected market return projections, from an investor and shareholder point of view, when using reported financial metrics predominantly ROE. A wide body of literature centers on ROE as the predominant measure of bank profitability. This study introduces other metrics as alternatives; efficiency assessed through the total expenditure to total income ratio, liquidity through total loans to total deposits ratio, and asset quality through non-performing loans to gross loans and advances ratio. The study used only secondary data, which covered a period of 10 years from 2006 to 2016. The dependent variable under assessment, market returns, was assessed as the ratio increment between previous year end market price and current year end market price. The resulting relationships were assessed through Pearson's correlation and standard multiple linear regression analysis. The relationship found that ROE had a negative, albeit weak and statistically insignificant relationship with market returns at alpha 0.05; this therefore indicated that the metric could not be deduced, from this study, to be a predictor of market returns. Likewise, liquidity, efficiency and asset quality were not deemed significant predictors of market returns in the Kenyan context as observed through both the multiple regression model and Pearson's correlation. The study is therefore of significance to investors, banks and regulators as it serves to point to the need for alternative reported bank metrics in assessing market return trendsen_US
dc.identifier.urihttp://hdl.handle.net/11071/6067
dc.language.isoenen_US
dc.publisherStrathmore Universityen_US
dc.subjectBank_Kenyaen_US
dc.subjectFinancial performanceen_US
dc.subjectStock price returnsen_US
dc.titleThe Relationship between bank performance and market returns in listed banks in Kenyaen_US
dc.typeThesisen_US
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