Interactions among Stock Price and Financial Ratios: The Case of Turkish Banking Sector

Abstract

One of the important variables for investors is the price of stocks and so that the variables that affect the price of the stocks. There are many indicators and methods such as fundamental and technical analysis that investors can use in valuing these instruments. Fundamental analysis, and financial ratios are tools that are generally used in investments process. Especially price-earnings ratio and dividend yield ratio are traditional financial ratios which are used to forecast the performance of the stock. In this context, the purpose of this study is to analyze the relationships between the price, price-earnings ratio and dividend yield ratio of the companies that are listed at BIST Banking sub-sector. In this context, in line with the aim of the study monthly price, price-earnings ratio and dividend yield ratio of VAKBN; ISCTR; HALKB; GARAN; AKBNK stocks between 2008M10-2017M3 will be analyzed by VAR methodology. Results show that the relationships between the abovementioned variables changes in size and direction from bank to bank.