Assessing the impact of bank-specific financial ratios on stock prices of publicly listed banks in the Philippines

• Main Authors: Cano, Sherrina, Marpa, Onaizah Gracelle N., Miranda, Vince Raphael R., Quimbo, Bianca Mari A.
• Format: text
• Language: English
• Published: Animo Repository 2021
• Subjects: Ratio analysis; Stocks—Prices—Philippines; Economics; Finance and Financial Management
• Online Access: https://animorepository.dlsu.edu.ph/etdb_econ/29; https://animorepository.dlsu.edu.ph/cgi/viewcontent.cgi?article=1031&context=etdb_econ
• Institution: De La Salle University

Financial ratios are one of the means that managers consider in making strategies to increase profitability. Previous studies have used general ratios like debt to equity ratio, return on assets, or return on equity, but little research has been developed to use bank-specific financial ratios in evaluating bank performance. This study shows how these financial ratios can show the performance of banks and their strategies using data from audited financial statements released by publicly listed banks in the Philippine Stock Exchange. The results show that net interest margin, loans to deposits ratio, book value per share, earnings per share, and firm size all have significant impacts on stock prices while tier-1 leverage and efficiency ratio did not. These findings conclude that bank-specific financial ratios should be considered more by managers when setting their stock price and firm value, considering the rapid growth of the banking industry.