Abstract
The focus of this research paper is to investigate empirically the relationship between key ratios of monetary policy of India with bank index and stock prices of banks. The research employed data from 2012 – 2015. The paper
used time series analysis on changes in bank rates, repo, reverse repo, CRR and SLR spanning from 2012 – 2015.
Using method of CAAR (cumulative average abnormal returns) an event study methodology were used to analyze
the impact of the key ratios on bank stock prices. At 5% level of significance, findings were drawn for the hypothesis. The major findings of the study were that there is a significant difference in the stock prices of major banks pre and post announcement of key ratios made by Reserve Bank of India.
Keywords: Monetary Policy, Stock Prices, Bank Index, Caar.
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