ABSTRACT
This is an empirical study on the impact of deregulation of interest rates on the stocks of banks quoted on the stockc exchange. Eight banks were examined, employing ratio analysis. Nine ratios and three trends wer employed. Of the eight banks four were quoted before interest rates were deregulated while four after. Profitability and shareholder related ratios were applied to determine profitability of
banks before and after interest rates were deregulated and how this has influenced the pricing of their stocks on the stock exchange market.
Three hypotheses are tested and rejected by the study. It was discovered that in this study, economic performance of banks does not have a direct relationship to higher
share price. Inter alia, higher profitability ratios do not have direct relationship to higher
share prices.
It was also discovered that higher deposits io not have direct relationship to profitability and also does not translate to higher share prices.
It was found during the studies that deregulation of interest rates had a profound influence on the behaviour of bank stock quoted on the stock exchange. Also it was noted that when profitability ratio declined during this period, share prices also declined
greatly.
