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The impact of financial structure and macroeconomic variables on profitability of Nepalese commercial banks / Upadhaya, Swechha
Title : The impact of financial structure and macroeconomic variables on profitability of Nepalese commercial banks Material Type: printed text Authors: Upadhaya, Swechha, Author Publication Date: 2017 Pagination: 118p Size: GRP/Thesis Accompanying material: 8/b Languages : English Class number: 332.632 Abstract: Profitability is the major concern of any business because it shows surplus of profit over expenses for a specified period of time that represent earning of the banks. Return on assets, return on equity and net interest margin is the three ratios which represent profitability measures (San and Heng, 2013). Firm profitability depends on financial structure and macroeconomic variables. Financial structure is concerned with the decision to utilize internal resources or external resources. The financing decision regarding investment is concerned with three areas such as new venture, expansion of current venture and replacement of assets. After the investment decision is finalized the firm next important decision is how to finance its investment. The investment can use the mix of debt and equity for the purpose of financing (Hillier et al., 2012).Profitability and efficiency ratios are all influenced by debt which is a key component of the financial structure. How much of debt that is used to finance the operations of the banks is crucial since banks are highly levered. Debts contribute significantly in financing long term assets that generate revenue for companies and how debt is utilized to generate profit indicates the efficiency of management.The macroeconomic determinant are variables that are not related to the bank management but reflect the economic and legal environment the affect the performance of bank. Similarly, profitable bank contribute positively to gross domestic product of the nation (Saini and Sindhu, 2014). Therefore, financial structure and macroeconomic variables are the important factor influencing profitability of the bank.
This study attempts to examine the impact of financial structure and macroeconomic variables on profitabilityof the Nepalese commercial banks. The study is based on secondary data of 18 commercial banks with 144 observations for the period of 2007/08 to 2014/15. The main source of data includes various issues of Banking and Financial Statistics published by Nepal Rastra Bank, economic survey and annual reports of selected commercial banks. The research design adopted in this study is descriptive and causal comparative research design as it deals with the impact of financial structure and macroeconomic variables on profitability of Nepalese commercial banks.
The average return on assets is highest for SCBL (2.52 percent) and lowest for MBL (0.69 percent). The average return on equity is highest for NABL (29.61 percent) and lowest for MBL (6.93 percent).Likewise, the average net interest margin is highest for ADB (5.81 percent) and lowest for NMB (2.20 percent).The structure and pattern analysis of average short term debt to total capital shows that SCBL has the highest average (7.23 times) and NCC has the lowest short term debt to total capital of (0.35 times).NABLhas the highest long term debt to total capital (95.47 times) and ADB has the lowest (27.98 times). ADBhas the highest average sales growth(83.46 percent) and SCBLhas the lowest (8.51 percent).Similarly, the structure and pattern analysis of average firm size shows that NABL has the highest of (Rs 80.29 million) and LBL has the lowest of (Rs 12.76 million).
The descriptive statistics for selected commercial bank shows that the average return on assets, return on equity, net interest margin, short term debt to total capital, long term debt to total capital, firm size, sales growth, inflation and GDP are 1.55 percent, 17.45 percent, 3.19 percent, 2.53 times, 87.84 times, Rs 37.20 million, 26.17 percent, 9.12 percent and 4.55 percent respectively.
The correlation matrix shows that short term debt to total capital and firm size are positively related to return on assets and return on equity, whilelong term debt to total capital and inflation are negatively related to return on assets and return on equity. Similarly, the result reveals that sales growth and GDP have positive relationship with return on assets and return on equity. The result also states that short term debt to total capital has positive relationship with net interest margin. However, long term debt to total capital; inflation and GDP have negative relationship with net interest margin. On the other hand, firm size and sales growth is positively related to net interest margin.
The regression result revealsthatlong term debt to total capital and inflation has negative impact on return on assets and return on equity. This states that higher the long term debt to total capital and inflation, lower would be the return on assets and return on equity. On the other hand, sales growth and GDP has positive impact on return on assets and return on equity. This denotes that higher the sales growth and GDP, higher would be the return on assets and return on equity. The study also reveals that short term debt to total capital and firm size arehas positive impact on return on equity and return on assets. This denotes that higher the short term debt to total capital and firm size, higher would be the return on assets and return on equity.The study also reveals that short term debt to total capital and firm size are the major determinant of return on assets and return on equity in Nepalese commercial banks.
The regression analysis reveals that firm size and sales growth has positive impact on net interest margin. This indicates that higher the firm size and sales growth, higher would be the net interest margin. However, long term debt to total capital, inflation and GDP has negative impact on net interest margin. This reveals that higher the long term debt to total capital, inflation and GDP, lower would be the net interest margin. On the other hand, short term debt to total capital has positive impact on net interest margin. This states that higher the short term debt to total capital, higher would be the net interest margin. The study also reveals that short term debt to total capital is the major determinant of net interest margin in Nepalese
The impact of financial structure and macroeconomic variables on profitability of Nepalese commercial banks [printed text] / Upadhaya, Swechha, Author . - 2017 . - 118p ; GRP/Thesis + 8/b.
Languages : English
Class number: 332.632 Abstract: Profitability is the major concern of any business because it shows surplus of profit over expenses for a specified period of time that represent earning of the banks. Return on assets, return on equity and net interest margin is the three ratios which represent profitability measures (San and Heng, 2013). Firm profitability depends on financial structure and macroeconomic variables. Financial structure is concerned with the decision to utilize internal resources or external resources. The financing decision regarding investment is concerned with three areas such as new venture, expansion of current venture and replacement of assets. After the investment decision is finalized the firm next important decision is how to finance its investment. The investment can use the mix of debt and equity for the purpose of financing (Hillier et al., 2012).Profitability and efficiency ratios are all influenced by debt which is a key component of the financial structure. How much of debt that is used to finance the operations of the banks is crucial since banks are highly levered. Debts contribute significantly in financing long term assets that generate revenue for companies and how debt is utilized to generate profit indicates the efficiency of management.The macroeconomic determinant are variables that are not related to the bank management but reflect the economic and legal environment the affect the performance of bank. Similarly, profitable bank contribute positively to gross domestic product of the nation (Saini and Sindhu, 2014). Therefore, financial structure and macroeconomic variables are the important factor influencing profitability of the bank.
This study attempts to examine the impact of financial structure and macroeconomic variables on profitabilityof the Nepalese commercial banks. The study is based on secondary data of 18 commercial banks with 144 observations for the period of 2007/08 to 2014/15. The main source of data includes various issues of Banking and Financial Statistics published by Nepal Rastra Bank, economic survey and annual reports of selected commercial banks. The research design adopted in this study is descriptive and causal comparative research design as it deals with the impact of financial structure and macroeconomic variables on profitability of Nepalese commercial banks.
The average return on assets is highest for SCBL (2.52 percent) and lowest for MBL (0.69 percent). The average return on equity is highest for NABL (29.61 percent) and lowest for MBL (6.93 percent).Likewise, the average net interest margin is highest for ADB (5.81 percent) and lowest for NMB (2.20 percent).The structure and pattern analysis of average short term debt to total capital shows that SCBL has the highest average (7.23 times) and NCC has the lowest short term debt to total capital of (0.35 times).NABLhas the highest long term debt to total capital (95.47 times) and ADB has the lowest (27.98 times). ADBhas the highest average sales growth(83.46 percent) and SCBLhas the lowest (8.51 percent).Similarly, the structure and pattern analysis of average firm size shows that NABL has the highest of (Rs 80.29 million) and LBL has the lowest of (Rs 12.76 million).
The descriptive statistics for selected commercial bank shows that the average return on assets, return on equity, net interest margin, short term debt to total capital, long term debt to total capital, firm size, sales growth, inflation and GDP are 1.55 percent, 17.45 percent, 3.19 percent, 2.53 times, 87.84 times, Rs 37.20 million, 26.17 percent, 9.12 percent and 4.55 percent respectively.
The correlation matrix shows that short term debt to total capital and firm size are positively related to return on assets and return on equity, whilelong term debt to total capital and inflation are negatively related to return on assets and return on equity. Similarly, the result reveals that sales growth and GDP have positive relationship with return on assets and return on equity. The result also states that short term debt to total capital has positive relationship with net interest margin. However, long term debt to total capital; inflation and GDP have negative relationship with net interest margin. On the other hand, firm size and sales growth is positively related to net interest margin.
The regression result revealsthatlong term debt to total capital and inflation has negative impact on return on assets and return on equity. This states that higher the long term debt to total capital and inflation, lower would be the return on assets and return on equity. On the other hand, sales growth and GDP has positive impact on return on assets and return on equity. This denotes that higher the sales growth and GDP, higher would be the return on assets and return on equity. The study also reveals that short term debt to total capital and firm size arehas positive impact on return on equity and return on assets. This denotes that higher the short term debt to total capital and firm size, higher would be the return on assets and return on equity.The study also reveals that short term debt to total capital and firm size are the major determinant of return on assets and return on equity in Nepalese commercial banks.
The regression analysis reveals that firm size and sales growth has positive impact on net interest margin. This indicates that higher the firm size and sales growth, higher would be the net interest margin. However, long term debt to total capital, inflation and GDP has negative impact on net interest margin. This reveals that higher the long term debt to total capital, inflation and GDP, lower would be the net interest margin. On the other hand, short term debt to total capital has positive impact on net interest margin. This states that higher the short term debt to total capital, higher would be the net interest margin. The study also reveals that short term debt to total capital is the major determinant of net interest margin in Nepalese
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Barcode Call number Media type Location Section Status 347/D UPA Thesis/Dissertation Uniglobe Library Social Sciences Available