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Table 1: Cumulative Abnormal Return (CAR) During Event Window
Table 1: Cumulative Abnormal Return (CAR) During Event Window
Interpretation of Results
The table 1 above illustrates the CAR values and t-statistic over the test period [-10, +10]
days of KP oli's sworn in. Among the five selected commercial banks, all banks except Global
IME bank's CAR are significant. As the CAR of NABIL,KBL, PCBL and MBL are significant,
this means the CAR for these stocks fluctuated highly during the event window. For NABIL, the
CAR is 1.50% meaning the NABIL unusual stock return due to prime ministers sworn in would
be 1.50%. Similarly, for KBL and PCBL, the unusual stock return due to prime ministers sworn
in would be 4.04% and 1.51%. This means the event has caused the fluctuations in the returns of
these stocks. The abnormal returns significance is not found for GIBL
Similarly, looking at the CAR for the Index return during the event time, the p-value is
found to be 0.02895 which indicates the impact of prime ministers sworn in on the stock market
as a whole is significant. Due to the event, the market return has declined by 0.71%. Therefore
this means that there is a significant Abnormal returns in stock market when the prime minster
KP Olis sworn in is made. Looking at the findings on Induvial stocks and NEPSE index, the
presence of abnormal returns is found indicating the reaction of investors to the political events
like Prime ministers sworn in.
Mean Difference of Returns (-10, +10 days)
Table 2: Difference of Average daily return before and after the event
Stock Average Return Average Return After Mean Difference
before Event Event
Nabil Bank 0.15% -0.29% 0.44%
Table 2, depicts the 10 days average daily return of the stocks before and after the
occurrence of Prime minister KP oli's sworn in. The mean difference is the difference between
average return berfore and after the occurrence of event. The highest mean difference is seen on
MBL's Stock as the difference of 0.77% is found in average return before and after the event.
Similarly, GIBL, has mean difference of 0.62%. For NEPSE index return, the mean difference of
0.59% is found which indicates the fluctuations in the return after occurrence of the event. For
NABIL's Stock, the mean difference is found to be 0.44% which is followed by PCBL (0.43%)
and Kumari Bank Limited (-0.16%). The differences in the average return during the pre-event
window and post event window indicates the fluctuations in the returns which may be caused
due to various reasons. But the significant changes in return just after the sworn in of prime
minister indicates the influence of political event on stock market which can be seen in findings
of Table 1 also.
Figure 2: Abnormal Returns of KBL before and after Prime ministers sworn in
1200.00% KBL abnormal Returns
1000.00%
Abnormal Returns
800.00%
600.00%
400.00%
200.00%
0.00%
Event Date, feb 15
Figure 3: Abnormal Returns of PCBL before and after Prime ministers sworn in
800.00%
400.00%
0.00%
Event Date
Figure 4: Abnormal Returns of PCBL before and after Prime ministers sworn in
800.00%
600.00%
400.00%
200.00%
0.00%
Event Date feb 15
Figure 5: Abnormal Returns of PCBL before and after Prime ministers sworn in
GIBL abnormal returns
1200.00%
Abnormal Return
1000.00%
800.00%
600.00%
400.00%
200.00%
0.00%
Event Date, Feb, 15
Figure 6: Abnormal Returns of PCBL before and after Prime ministers sworn in
1200.00%
800.00%
400.00%
0.00%
Event Date feb 15