Banks play a very important role for the development of a country, as they are the basis of the financial system of a country. In India, the nationalized banks like Indian Bank, SBI and IOB have played a pivotal role in the development of the country. Traditionally, these banks have functioned from the past. But, within the last few decades, private sector banks have also sprung up in competition to the nationalized banks. Today, the Indian economy is counted among the top five economies in the world. The funds accumulated in the accounts of the banks are used for provision of loans to the needy and the banks charge a nominal interest on the loans disbursed. The difference between the loan amounts lent and the amounts received by the banks for the loans lent to its customers forms the income of the banks. The shareholders of a bank purchase the shares in the share markets expecting a rise in share prices in future. Some of the factors which contribute to the share price rise in the share market include earnings per share for the shareholder, dividends paid to the shareholders apart from the other factors. The earnings per share (EPS) and dividend payout ratio are considered as two very important parameters, as they indicate the profitability of the bank and the responsibility shown by the bank toward its customers, respectively, both of which contribute to the brand value of the bank. This paper predicts the EPS, dividend payout ratio, and market share price of three nationalized banks, namely Indian Bank, IOB, and SBI, which have been a very important part of the Indian economy since long time. For this, the paper utilizes secondary data of these banks and performs a linear regression analysis on these data. Linear regression analysis predicts based on the trend in the data.

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A Predictive Model of Earnings per Share and Dividend Payout Ratio on Market Price with Reference to PSU Banks

  • K. Maran,
  • R. Ganesh Kumar,
  • C. R. Senthilnathan

摘要

Banks play a very important role for the development of a country, as they are the basis of the financial system of a country. In India, the nationalized banks like Indian Bank, SBI and IOB have played a pivotal role in the development of the country. Traditionally, these banks have functioned from the past. But, within the last few decades, private sector banks have also sprung up in competition to the nationalized banks. Today, the Indian economy is counted among the top five economies in the world. The funds accumulated in the accounts of the banks are used for provision of loans to the needy and the banks charge a nominal interest on the loans disbursed. The difference between the loan amounts lent and the amounts received by the banks for the loans lent to its customers forms the income of the banks. The shareholders of a bank purchase the shares in the share markets expecting a rise in share prices in future. Some of the factors which contribute to the share price rise in the share market include earnings per share for the shareholder, dividends paid to the shareholders apart from the other factors. The earnings per share (EPS) and dividend payout ratio are considered as two very important parameters, as they indicate the profitability of the bank and the responsibility shown by the bank toward its customers, respectively, both of which contribute to the brand value of the bank. This paper predicts the EPS, dividend payout ratio, and market share price of three nationalized banks, namely Indian Bank, IOB, and SBI, which have been a very important part of the Indian economy since long time. For this, the paper utilizes secondary data of these banks and performs a linear regression analysis on these data. Linear regression analysis predicts based on the trend in the data.