Abstract
In recent economic recession, portfolio theory progressively motivated banks to strategically concentrate on shareholders' investment returns. The analysis of the determinants of bank performance and their association with investment returns has become increasingly important. In presence of alternative investment opportunities of competitive market returns, bank stock performance is explored under depressed investment environment. For this research study, a sample of 16 banks listed at Karachi Stock Exchange was extracted on random basis. To calculate monthly stock returns, daily stock prices were used for a period of 2003-2010. Capital Asset Pricing Model (CAPM) was used to compute the expected bank stock returns. Results of performance metrics demonstrated insignificant correlation in movements of bank stock returns. Findings of this study suggested that in reflection of better market returns, banks tend to outperform for improvement of their shareholders' investment returns and value maximization.
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