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Study on the Influencing Factors of the P/E Ratio of Bank Listed Companies in Chinese A-Stock Market

Author: ZhouYuLe
Tutor: ZhangLiFeng
School: Zhejiang University of Finance
Course: Western Economics
Keywords: Bank Listed Companies P/E Ratio Influencing Factors Panel Data
CLC: F224
Type: Master's thesis
Year: 2012
Downloads: 321
Quote: 0
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Abstract

Finance is the core of modern economy, banking industry is the leading industry of our country’s financial system, it also occupy a very important position in the whole national economy system. With the development of Chinese capital market, also with the related policy encouragement and guidance, our country’s commercial banks accelerate the listed pace. In 2010, when China Agricultural Bank was listed, all the five big commercial banks and most of the joint-stock commercial banks of our country have already landed the capital market, listed banks’representation in our country’s bank system was also greatly enhanced.P / E ratio is the perfect combination of market expectation and enterprise performance, it can help investors judge the investment value of stocks more scientifically. The trend and movements of bank listed companies have great influence on the whole stock market. The change trend of the average P/E ratio of bank companies and the whole market is generally the same. Since 2009, the average P/E ratio of bank companies has long been below the whole market, this phenomenon has caused wide attention and intense discussion. But generally speaking, the research before is not comprehensive and systematic. Therefore, on the basis of the previous studies, this paper uses the data of listed commercial banks and the related influencing factors, to analyze systematically the factors which can lead to the change of the P/E ratio of the listed bank companies and which factor’s influence is more significant.This paper can be divided into 6 parts: the first part introduces the research background and theoretical significance; the second part introduces the concept of P/E ratio and the related theory; the third part is a summary of the bank listed companies of our country and a generally description of the average P/E ratio of the listed bank companies; the fourth part is the theoretical analysis of the influence factors of the P/E ratio, analyzed the banking business performance、its special status、the government regulation、the volatility of the stock market and the behavior of the investors , to set a theoretical basis for the following empirical analysis. The fifth part is the empirical analysis, the influencing factors were divided into five categories, the 3 banks which were listed for a longer time and all the 12 banks’panel data and the related factors’data were used respectively for our research. Panel data regression, Panel Data Cointegration test and FMOLS method were used to verify the theoretical analysis results; the sixth part is the conclusion, Based on the theoretical analysis and empirical Study, we put forward the research conclusion of this paper.We found that SZPE、EPSG、LNCSTOCK、CAR and TURNOVER have significant influence on the P/E ratio of bank listed companies. Among these factors, the P / E ratio level of the whole stock market is the most significant index, it may because the bank companies’market capitalization occupies a large proportion in the entire market. Influence role followed by EPSG which reflects the bank performance and TURNOVER which reflects the investor sentiment and preference, the two factor move in the same direction with the P/E ratio, namely the growth in bank’s earning per share and investors’preference can help improve the bank listed companies’P/E level. In 12 banks listed companies’panel data regression, we discovered that the move of the banks’P/E and its volume of circulating common stocks is negatively correlated, in other words, the more its circulating stock, the lower its P/E level is. The data regression also found that CAR, the factor which reflects the government regulation has a positive correlation with the banks’P/E. CAR index is the bank’s assets to its risk ratio, it can embody the bank’s capability to deal with the risk it’s subjected to.

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CLC: > Economic > Economic planning and management > Economic calculation, economic and mathematical methods > Economic and mathematical methods
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