Study On The Valuation Of Listed Bank Companies In Chinese A-Stock Market

Listed commercial banks occupy a very important position in anyone of mature capital markets. Banking industry works as a key factor to maintain our country’s financial system and capital market stable. P/E ratio is a widely used relative valuation ratio by both institutional investors and private investors, because it has a lot of advantages like easy and direct-viewing. The average P/E ratio of bank companies in Chinese A-stock market has long been below the whole market’s level, which has caused wider and wider attention and is worth further study.Relative research before is not very comprehensive or systematic. Although there are some discussion about factors of Chinese listed banks’valuation, most of them are focusing on qualitative analysis and case study. Therefore, based on the previous studies, the basic method adopted in the paper is to combine the theoretical analyses with the empirical test. In this paper, we will discuss more deeply about influence factors of P/E ratio of listed banks. Then, with the data of listed banks and the related influencing factors, we use regression models to test whether the theoretical analyses above is united with data analysis resultsOur study shows that average P/E ratio of A-stock market and core capital adequacy ratio are significantly and positively correlated with Chinese listed banks’P/E ratios. And total asset, difference between Mi’s change rate and M2’s change rate, the Beta index of banking industry, non-performing loans, and the ratio of payment and operating incomes are significantly and negatively correlated with Chinese listed banks’P/E ratios.