Investigating different factors influencing on return of private banks

• Main Author: Pegah Motamedi
• Format: Article
• Language: English
• Published: Growing Science 2013-09-01
• Series: Management Science Letters
• Subjects: Stock return; Banking industry; Systematic risk; Bank size
• Online Access: http://www.growingscience.com/msl/Vol3/msl_2013_254.pdf

Return of Investment has always been an interesting area of research among academics as well as investors. Although capital asset pricing model (CAPM) is capable of estimating risk of investment, many people argue that CAPM is not able to predict long-term return, properly. This paper presents an empirical investigation to find the effects of different financial figures including systematic risk (Beta), size of firm, ratio of book value to market share, volume of trade and the ratio of price/earnings (P/E) on return of private banks in Iran. The study gathers the necessary information over the period 2005-2011 from private banks in Iran. The study uses multiple regression technique to find the effects of mentioned variables on return of private banks. The results indicate that there are some meaningful and positive relationship between return of banks and systematic risk (Beta), size, volume of trade and P/E. The study also finds some meaningful and reverse relationship between bank return and book value on market value.