THE IMPACT OF DEREGULATION OF INTEREST RATES ON THE PRICING OF QUOTED BANKS STOCKS
THE IMPACT OF DEREGULATION OF INTEREST RATES ON THE PRICING OF QUOTED BANKS STOCKS
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Date
1999-06
Authors
DIKKI, MICHEAL EZRA
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Abstract
This is an empirical study on the impact of deregulation of interest rates on the stocks of
banks quoted on the stockc exchange. Eight banks were examined, employing ratio
analysis. Nine ratios and three trends wer employed. Of the eight banks four were
quoted before interest rates were deregulated while four after.
Profitability and shareholder related ratios were applied to determine profitability of
banks before and after interest rates were deregulated and how this has influenced the
pricing of their stocks on the stock exchange market.
Three hypotheses are tested and rejected by the study. It was discovered that in this
study, economic performance of banks does not have a direct relationship to higher
share price. Inter alia, higher profitability ratios do not have direct relationship to higher
share prices.
It was also discovered that higher deposits io not have direct relationship to profitability
and also does not translate to higher share prices.
It was found during the studies that deregulation of interest rates had a profound
influence on the behaviour of bank stock quoted on the stock exchange. Also it was
noted that when profitability ratio declined during this period, share prices also declined
greatly.
Description
A PROJECT SUBMITTED TO THE POSTGRADUATE SCHOOL
AHMADU BELLO UNIVERSITY, ZARIA IN PARTIAL
FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREF OF
MASTERS OF BUSINESS ADMINISTRATION (MBA)
DEPARTMENT OF BUSINESS ADMINISTRATION, FACULTY OF
ADMINISTRATION, AHMADU BELLO UNIVERISTY, ZARIA.
JUNE,
Keywords
IMPACT,, DEREGULATION,, INTEREST RATES,, PRICING OF QUOTED BANKS STOCKS.