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Analysis of UAE Bank Stocks

Author

Listed:
  • Ananth Rao

    (Dubai University College)

Abstract

Listing of stocks on the stock exchange offers business firms several advantages such as diversification, liquidity, establishing a value for the firm etc. The present paper analyses stocks of six commercial banks (viz., Dubai Commercial Bank, Emirates Bank International, National Bank of Dubai, Mashreq Bank, National Bank of Abu Dhabi, and Abu Dhabi Commercial Bank) which constitutes 72% of the capitalisation of the banking sector in UAE. These bank stock prices are analysed for the trend and riskiness. Capital Asset Pricing Model (CAPM) a market equilibrium model is applied to these seven bank’s stocks. The betas of these banks were derived. Stock prices of all banks are found to be under-priced. It was considered that more general models like multi-factor CAPM and arbitrage pricing theory (APT) models could be more appropriate models for analysing the bank stocks due to imperfections in UAE market.

Suggested Citation

  • Ananth Rao, 2003. "Analysis of UAE Bank Stocks," Finance 0306001, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpfi:0306001
    Note: Type of Document - Windows 2000-Word; prepared on Windows-NT; to print on HP; pages: 17; figures: included. The article wass published in "Economic Horizon" (ISSN-1024-266X) Vol.21.No.82-AH1420-2000(2)
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    More about this item

    Keywords

    UAE Banks; CAPM; Stocks; Financial Markets; Efficiency;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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