Stock Cumulative Abnormal T-Statistics P-Value Significance

Return (CAR)
Nabil Bank 1.50% 2.82755 0.00234 Significant

Kumari Bank 4.04% 4.56162 0.00000 Significant

Limited (KBL)
Prime Commercial 1.51% 2.2677 0.01167 Significant
Bank (PCBL)
Machhapuchre Bank -2.45% -2.8012 0.00254 Significant
Limited (MBL)
Global IME Bank 0.55% 0.70836 0.23936 Not Significant
Limited (GIBL)

NEPSE Index -0.71% -1.8963 0.02895 Significant

Presentation of Results

Given the nature of an efficient market, it is impossible to make abnormal returns by

trading on past trends, publicly available information or any other private information. Thus if

there is no unusual movements in the stock returns around the event, then it’s obvious that the

Cumulative abnormal returns (CAR) will be fluctuating around zero which means the Prime

minister's sworn in hold no information. If the CAR during event window fluctuates highly then

this indicates prime minster KP oli's sworn in to hold some information. The T- statistic

represents the size of difference relative to the abnormal returns during the event window.

Higher the magnitude of T, greater would be evidence suggesting abnormal returns during that

period. Similarly, P-value less than 0.05 indicates the significance of Prime ministers sworn in

on the returns of the stock indicating the traders would have gained if they have traded 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 which can be referred in the Annex (Figures 1-6) showing the abnormal returns

before and after event. The abnormal returns significance is not found for GIBL as p value <0.05

indicating the absence of unusual returns is found on the GBIL stocks during the event period.

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.

ANNEX

Figure 1: Abnormal Returns of NABIL before and after Prime ministers sworn in
 1200.00% NABIL abnormal Returns
1000.00%
Daily Abnormal Retunr

800.00%

600.00%

400.00%

200.00%

0.00%
Event Date Feb 15

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

PCBL abnormal returns

1200.00%
1000.00%
800.00%
Axis Title

600.00%
400.00%
200.00%
0.00%
Event Date

Figure 4: Abnormal Returns of PCBL before and after Prime ministers sworn in
 1200.00% MBL abnormal returns
1000.00%
Abnormal Return

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%
1000.00%
Abnormal Return

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

NEPSE, Abnormal return

1200.00%

1000.00%
Abnormal Return

800.00%

600.00%

400.00%

200.00%

0.00%
Event Date feb 15