Firm-Specific and Macroeconomic Determinants of Share Prices of Nepalese Microfinance Institutions

This study investigates the firm-specific and macroeconomic factors influencing the market price of shares of Nepalese microfinance institutions (MFIs) listed on the Nepal Stock Exchange (NEPSE). The study employed a descriptive and causal-comparative research design using secondary panel data from ten listed MFIs covering the fiscal years 2015/16 to 2024/25, yielding 100 firm-year observations. Market Price of Stock (MPS) was examined as the dependent variable, while Earnings per Share (EPS), Dividend per Share (DPS), Return on Equity (ROE), Non-Performing Loan (NPL), Interest Rate (IR), and Money Supply (M2) were used as explanatory variables. Descriptive statistics, Pearson correlation, and multiple regression analyses were applied to evaluate the relationships among the variables. The regression model explained 40.3% of the variation in share prices (R² = 0.403) and was statistically significant (F = 10.45, p < 0.001). The findings reveal that Dividend per Share has a significant positive effect on the market price of microfinance shares, whereas Interest Rate exerts a significant negative effect. Although EPS, ROE, NPL, and Money Supply exhibited theoretically expected relationships with share prices, their effects were statistically insignificant in the multivariate model. The findings suggest that dividend policy and monetary conditions are the principal determinants of the market valuation of Nepalese MFIs. The study contributes to the literature on emerging capital markets by integrating firm-specific financial indicators with macroeconomic variables and provides practical implications for investors, corporate managers, and policymakers seeking to improve investment decisions and market stability.