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Analysis of UAE Bank Stocks

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  • Ananth Rao

    (Dubai University College)

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    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.

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    File URL: http://128.118.178.162/eps/fin/papers/0306/0306001.pdf
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    Bibliographic Info

    Paper provided by EconWPA in its series Finance with number 0306001.

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    Length: 17 pages
    Date of creation: 07 Jun 2003
    Date of revision:
    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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    Web page: http://128.118.178.162

    Related research

    Keywords: UAE Banks; CAPM; Stocks; Financial Markets; Efficiency;

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