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Refine your search Apply to external sourcesBank liquidity risk and performance : a case of Nepalese commercial banks / Rajesh Gupta
Title : Bank liquidity risk and performance : a case of Nepalese commercial banks Material Type: printed text Authors: Rajesh Gupta, Author Publication Date: 2016 Pagination: 96p. Size: GRP/Thesis Accompanying material: 7/B Languages : English Descriptors: Liquidity (Economics) Class number: 658.152 Abstract: Liquidity management is a common principle in banking management. It means ensuring that the bank possesses sufficient cash to satisfy unexpected cash outlets. Liquidity management is an important function of any business because it is the determinant of whether the entity will be in operation in the foreseeable future or not. However, more than enough liquidity is also harmful and thus invites profitability risk. An adequate liquidity position for one bank may not be sufficient for another. Lack of adequate liquidity is often one of the first signs that a bank is in serious financial trouble (Rose, 1999).
The performances of the financial institutions have proved to be an effective channel between savers and borrowers. A major adequate financial intermediation requires the purposeful attention of the bank management to profitability and liquidity, which are two conflicting goals of the commercial banks (Olagunju et al., 2011).
The study examines the relationship between the bank liquidity and its effect on the banks profitability. To analyze the structure and pattern of the variables. To find the relationship of return on assets, capital and reserve, and liquid assets to total assets with determinants of liquidity. Hence, this study attempts to analyze the liquidity risks and financial performance measures using credit to deposit ratio, cash, investment, total assets, cash reserve ratio, and capital adequacy ratio as the indicator to the Nepalese commercial banks. The study has selected 19 Nepalese commercial banks. The methods used for secondary data analysis included descriptive analysis, correlation analysis and regression analysis.
The major conclusion of this study is that total deposit, capital adequacy ratio, and cash reserve ratio have significantly positive impact on capital and reserve whereas non-performing loan to total loan have significantly negative with capital and reserve. Similarly, credit to deposit, deposit, cash reserve ratio and capital adequacy ratio have significantly positive with liquid assets to total assets. Likewise, total assets and investment have significantly positive with return on assets whereas negatively with non-performing loan to total loan.
Bank liquidity risk and performance : a case of Nepalese commercial banks [printed text] / Rajesh Gupta, Author . - 2016 . - 96p. ; GRP/Thesis + 7/B.
Languages : English
Descriptors: Liquidity (Economics) Class number: 658.152 Abstract: Liquidity management is a common principle in banking management. It means ensuring that the bank possesses sufficient cash to satisfy unexpected cash outlets. Liquidity management is an important function of any business because it is the determinant of whether the entity will be in operation in the foreseeable future or not. However, more than enough liquidity is also harmful and thus invites profitability risk. An adequate liquidity position for one bank may not be sufficient for another. Lack of adequate liquidity is often one of the first signs that a bank is in serious financial trouble (Rose, 1999).
The performances of the financial institutions have proved to be an effective channel between savers and borrowers. A major adequate financial intermediation requires the purposeful attention of the bank management to profitability and liquidity, which are two conflicting goals of the commercial banks (Olagunju et al., 2011).
The study examines the relationship between the bank liquidity and its effect on the banks profitability. To analyze the structure and pattern of the variables. To find the relationship of return on assets, capital and reserve, and liquid assets to total assets with determinants of liquidity. Hence, this study attempts to analyze the liquidity risks and financial performance measures using credit to deposit ratio, cash, investment, total assets, cash reserve ratio, and capital adequacy ratio as the indicator to the Nepalese commercial banks. The study has selected 19 Nepalese commercial banks. The methods used for secondary data analysis included descriptive analysis, correlation analysis and regression analysis.
The major conclusion of this study is that total deposit, capital adequacy ratio, and cash reserve ratio have significantly positive impact on capital and reserve whereas non-performing loan to total loan have significantly negative with capital and reserve. Similarly, credit to deposit, deposit, cash reserve ratio and capital adequacy ratio have significantly positive with liquid assets to total assets. Likewise, total assets and investment have significantly positive with return on assets whereas negatively with non-performing loan to total loan.
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Barcode Call number Media type Location Section Status 200/D 658.152 GUP Books Uniglobe Library Technology Available
Title : Bank profitability and liquidity management: a comparative study of public banks, joint venture banks and private banks Material Type: printed text Authors: Dan Bahadur Bhandari, Author Publication Date: 2016 Pagination: 107p. Size: GRP/Thesis Accompanying material: 8/B Languages : English Descriptors: Bank liquidity
Liquidity (Economics)Class number: 332.632 Abstract: Liquidity management is anidea that is gettinga thoughtful attention all over the world especially with the present financial conditions and the state of the world economy. Some of the outstanding corporate goals comprise the need to exploit profit, preserve high level of liquidity in order to guarantee safety and to achieve the highest level of owner’s net worth attached with the accomplishment of other corporate purposes. The prominence of liquidity management as it affects corporate productivity in today’s business cannot be over emphasized. The critical part in managing working capital is to maintain the liquidity in day-to-day operation to safeguard its smooth running and meets its obligation (Eljelly, 2004). Liquidity plays a significant role in the effective functioning of a business firm.
Liquidity is the ability of financialorganizations to meet their short-term obligations (Olagunju et al., 2011). It is the ability of banks to change their assets into cash in a shortest possible time. Nwankwo (2004)explained that the banking liquidity management is simply to meet financial commitment whether it is withdrawing from a current account or interbank deposit or a maturing issue of commercial paper. Bank liquidity refers to the ability of a bank to raise certain amount of funds at a certain cost within a certain period of time to discharge obligations (Andabai and Bingilar, 2015). The greater the amount of funds a bank can raise in a certain time at a specified cost, the more liquid the bank is (Mehar, 2001). Liquidity management is important to financial management decision. The optimal liquidity management can be accomplished by a company that manage the trade-off between profitability and liquidity management (Bhunia and Khan, 2011).
The major objective of the study is to assess the relationship between bank profitability and liquidity management of the Nepalese commercial banks. The study is based on secondary data of 23 commercial banks with 138 observations for the period of 2009/10 to 2014/15. The main source of data include various issues of Banking and Financial Statistics, Quarterly Economic Bulletin, Bank Supervision Report published by Nepal Rastra Bank and Annual Reports of selected commercial banks. The pooled cross sectional data analysis has been undertaken in the study. The research design adopted in this study is descriptive and causal comparative research design as it deals with the relationship between liquidity management and bank profitability of Nepalese commercial banks.
The result shows that NBBL has highest average ROA, and NABIL has the highest average ROE among the selected commercial banks throughout the study period. Similarly, the average liquid assets to total assets ratio is highest for SCBL (34.52 percent), average quick ratio is highest for NCC (35.11 times), average cash to deposit ratio is highest for MBL (5.53 percent), average investment in government securities is highest for RBBL (RS. 19.72 billion) and average capital adequacy ratio is highest for JBL (14.33 percent).
The descriptive statistics for public bank shows that the average return on assets , return on equity, liquid assets to total assets ratio, cash to deposit ratio, quick ratio, investment in government securities, capital adequacy ratio and firm size is 1.92 percent, -6.12 percent, 25.73 percent, 3.52 percent, 3.06 time, Rs. 12.71 billion, 2.57 percent and Rs. 81.46 billion respectively. Similarly, the descriptive statistics for the joint venture banks reveals that the average return on assets, return on equity, liquid assets to total assets ratio, cash to deposit ratio, quick ratio, investment in government securities, capital adequacy ratio and firm size is 2.15 percent, 23.47 percent, 26.78 percent, 2.39 percent, 10.58 time, Rs. 6.28 billion, 14.60 percent and Rs. 11.84 billion respectively. The result for the private bank reveals that the average return on assets, return on equity, liquid assets to total assets ratio, cash to deposit ratio, quick ratio, investment in government securities, capital adequacy ratio and firm size is 1.38 percent ,13.45 percent, 25.72 percent, 3.27 percent, 17.73 time, Rs. 2.83 billion, 69.58 percent and Rs. 23.91 billion respectively.
The study of public banks shows that firm size and capital adequacy ratio is positively related to return on assets and return on equity whereas quick ratio, liquid assets to total assets ratio are negatively related to return on assets and return on equity. Similarly, the study of joint venture banks reveals that investment in government securities and firm size of the banks are negatively related to return on assets whereas liquid assets to total assets ratio and capital adequacy ratio are positively related to return on assets and return on equity. Likewise, the study of private banks shows that investment in government securities and firm size is positively related to return on assets and return on equity whereas liquid assets to total assets ratio, cash to deposit ratio, quick ratio and capital adequacy ratio are negatively related to return on assets and return on equity.
The regression results show that liquid assets to total assets ratio of the banks have significant negative impact on the bank profitability of public banks of Nepal with return on assets indicating higher the liquid assets to total assets ratio, lower would be the return on assets whereas it has positive and significant impact on return on assets of joint venture banks. Similarly, firm size has significant negative impact on the return on assets for joint venture banks whereas it has positive and significant impact on the return on assets for the private banks. The study also reveals that investment in government securities has significant positive impact with return on equity of public and private banks of Nepal indicating higher the investment in government securities, higher will be the return on equity. Similarly, the study also found that liquid assets to total assets ratio and firm size has significant positive impact on the return on equity for joint venture banks indicating that higher the liquid assets to total assets ratio and firm size, higher would be the return on equity.
Bank profitability and liquidity management: a comparative study of public banks, joint venture banks and private banks [printed text] / Dan Bahadur Bhandari, Author . - 2016 . - 107p. ; GRP/Thesis + 8/B.
Languages : English
Descriptors: Bank liquidity
Liquidity (Economics)Class number: 332.632 Abstract: Liquidity management is anidea that is gettinga thoughtful attention all over the world especially with the present financial conditions and the state of the world economy. Some of the outstanding corporate goals comprise the need to exploit profit, preserve high level of liquidity in order to guarantee safety and to achieve the highest level of owner’s net worth attached with the accomplishment of other corporate purposes. The prominence of liquidity management as it affects corporate productivity in today’s business cannot be over emphasized. The critical part in managing working capital is to maintain the liquidity in day-to-day operation to safeguard its smooth running and meets its obligation (Eljelly, 2004). Liquidity plays a significant role in the effective functioning of a business firm.
Liquidity is the ability of financialorganizations to meet their short-term obligations (Olagunju et al., 2011). It is the ability of banks to change their assets into cash in a shortest possible time. Nwankwo (2004)explained that the banking liquidity management is simply to meet financial commitment whether it is withdrawing from a current account or interbank deposit or a maturing issue of commercial paper. Bank liquidity refers to the ability of a bank to raise certain amount of funds at a certain cost within a certain period of time to discharge obligations (Andabai and Bingilar, 2015). The greater the amount of funds a bank can raise in a certain time at a specified cost, the more liquid the bank is (Mehar, 2001). Liquidity management is important to financial management decision. The optimal liquidity management can be accomplished by a company that manage the trade-off between profitability and liquidity management (Bhunia and Khan, 2011).
The major objective of the study is to assess the relationship between bank profitability and liquidity management of the Nepalese commercial banks. The study is based on secondary data of 23 commercial banks with 138 observations for the period of 2009/10 to 2014/15. The main source of data include various issues of Banking and Financial Statistics, Quarterly Economic Bulletin, Bank Supervision Report published by Nepal Rastra Bank and Annual Reports of selected commercial banks. The pooled cross sectional data analysis has been undertaken in the study. The research design adopted in this study is descriptive and causal comparative research design as it deals with the relationship between liquidity management and bank profitability of Nepalese commercial banks.
The result shows that NBBL has highest average ROA, and NABIL has the highest average ROE among the selected commercial banks throughout the study period. Similarly, the average liquid assets to total assets ratio is highest for SCBL (34.52 percent), average quick ratio is highest for NCC (35.11 times), average cash to deposit ratio is highest for MBL (5.53 percent), average investment in government securities is highest for RBBL (RS. 19.72 billion) and average capital adequacy ratio is highest for JBL (14.33 percent).
The descriptive statistics for public bank shows that the average return on assets , return on equity, liquid assets to total assets ratio, cash to deposit ratio, quick ratio, investment in government securities, capital adequacy ratio and firm size is 1.92 percent, -6.12 percent, 25.73 percent, 3.52 percent, 3.06 time, Rs. 12.71 billion, 2.57 percent and Rs. 81.46 billion respectively. Similarly, the descriptive statistics for the joint venture banks reveals that the average return on assets, return on equity, liquid assets to total assets ratio, cash to deposit ratio, quick ratio, investment in government securities, capital adequacy ratio and firm size is 2.15 percent, 23.47 percent, 26.78 percent, 2.39 percent, 10.58 time, Rs. 6.28 billion, 14.60 percent and Rs. 11.84 billion respectively. The result for the private bank reveals that the average return on assets, return on equity, liquid assets to total assets ratio, cash to deposit ratio, quick ratio, investment in government securities, capital adequacy ratio and firm size is 1.38 percent ,13.45 percent, 25.72 percent, 3.27 percent, 17.73 time, Rs. 2.83 billion, 69.58 percent and Rs. 23.91 billion respectively.
The study of public banks shows that firm size and capital adequacy ratio is positively related to return on assets and return on equity whereas quick ratio, liquid assets to total assets ratio are negatively related to return on assets and return on equity. Similarly, the study of joint venture banks reveals that investment in government securities and firm size of the banks are negatively related to return on assets whereas liquid assets to total assets ratio and capital adequacy ratio are positively related to return on assets and return on equity. Likewise, the study of private banks shows that investment in government securities and firm size is positively related to return on assets and return on equity whereas liquid assets to total assets ratio, cash to deposit ratio, quick ratio and capital adequacy ratio are negatively related to return on assets and return on equity.
The regression results show that liquid assets to total assets ratio of the banks have significant negative impact on the bank profitability of public banks of Nepal with return on assets indicating higher the liquid assets to total assets ratio, lower would be the return on assets whereas it has positive and significant impact on return on assets of joint venture banks. Similarly, firm size has significant negative impact on the return on assets for joint venture banks whereas it has positive and significant impact on the return on assets for the private banks. The study also reveals that investment in government securities has significant positive impact with return on equity of public and private banks of Nepal indicating higher the investment in government securities, higher will be the return on equity. Similarly, the study also found that liquid assets to total assets ratio and firm size has significant positive impact on the return on equity for joint venture banks indicating that higher the liquid assets to total assets ratio and firm size, higher would be the return on equity.
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Barcode Call number Media type Location Section Status 259/D 332.632 BHA Thesis/Dissertation Uniglobe Library Social Sciences Available
Title : Determinants of commercial banks’ liquidity in Nepal Material Type: printed text Authors: Pratima Sharma, Author Publication Date: 2016 Pagination: 90p. Size: GRP/Thesis Accompanying material: 6/B Languages : English Descriptors: Liquidity (Economics) Class number: 338.43 Abstract: Liquidity is the ability of the bank to fund asset growth and meet its obligations as they fall due without incurring acceptable losses. The fundamental role of banks in the maturity transformation of short-term deposits into long-term loans makes banks inherently vulnerable to liquidity risk, both of an institution-specific nature and that which affects markets as a whole. Virtually every financial transaction or commitment has implications for a bank’s liquidity. Effective liquidity risk management helps ensure a bank's ability to meet cash flow obligations, which are uncertain as they are affected by external events and other agents' behavior. Liquid assets are those that can be converted to cash quickly if needed to meet financial obligations; examples of liquid assets generally include cash, central bank reserves, and government debt.
The liquidity problem of banks is primarily and basically the problem of assuring that there will be an adequate amount of cash on hand, when needed, to meet all demands for cash. The task of providing sufficient cash presents itself in two ways: the individual bank, if it is to stay in business, must be able to meet all demands for cash including those resulting from the transfer of money to other banks in the system; and banks as a whole must be able to supply whatever demands are made upon them for the purpose of drawing money out of the system, whether abroad or for use in domestic circulation. A bank should acquire proper liquidities when needed immediately at a sensible cost. Though sustaining the optimal level of liquidity is a real art of bank’s management.
In context of Nepal, there are very few or almost no studies related to determinants of commercial banks’ liquidity. It is very essential to study in the context of Nepal whether various independent variables like capital adequacy ratio, return on assets, return on equity, non-performing loan ratio, credit to deposit ratio, bank size, net interest margin and total deposits to total assets ratio affects bank’s liquidity or not. Nepal’s banking sector has been passing through ups and downs in the last few years. For instance, Nepal faced the liquidity crunch a few years ago and now the banking sector has problems of excessive liquidity. There are various research conducted on determinants of liquidity in different countries such as Malaysia, Pakistan, Tunisia, etc. but almost no single research has been conducted on determinants of liquidity in Nepal. Though, a number of studies in various developing and developed countries have been conducted, findings of these studies may not be applied in Nepalese context. The study attempts to explore the various factors affecting determinants of liquidity of Nepalese commercial bank.
For this study, the sample includes all the commercial banks whose data is available for the study period 2007/08 -2013/14. After analyzing the total population (i.e. 30 commercial banks from financial statement analysis of Nepal Rastra Bank) the sample of 18 banks is selected. This study used seven years secondary data from different sources. The data regarding different variables are collected from the NRB supervision report and statistical report issued by NRB. Descriptive statistics, correlation analysis and regressions have been carried out to examine the secondary data. To achieve the objectives of this study, a model was developed using liquidity as the dependent variable and capital adequacy ratio, return on assets, return on equity, non-performing loan ratio, credit to deposit ratio, bank size, net interest margin and total deposit to total assets ratio as independent variables.
Based on the results, capital adequacy ratio, non-performing loan ratio, credit to deposits ratio, bank size and total deposits to total assets ratio are among the most dominant variables that affect the banks liquidity in the context of Nepalese commercial banks. Capital adequacy ratio, return on equity, bank size, net interest margin and total deposit to total assets ratio are negatively correlated with liquid assets to total assets ratio. Return on assets, non-performing loan ratio and credit to deposit ratio are positively related with liquid assets to total assets ratio. Likewise, return on assets, non-performing loan ratio and bank size total loans to total assets ratio are negatively correlated with total loans to total assets ratio. Capital adequacy ratio, return on equity, credit to deposit ratio, net interest margin and total deposit to total assets ratio are positively correlated with total loans to total assets ratio.
The recommendation put forward by this study is that capital adequacy ratio, non-performing loan ratio, credit to deposits ratio, bank size and total deposits to total assets ratio are most determining variables of banks’ liquidity so banks must consider these as important variables to make the decision related to liquidity of bank. Hence, it is recommended for all the banks to take preventive measures before the banks face illiquidity problems.
Determinants of commercial banks’ liquidity in Nepal [printed text] / Pratima Sharma, Author . - 2016 . - 90p. ; GRP/Thesis + 6/B.
Languages : English
Descriptors: Liquidity (Economics) Class number: 338.43 Abstract: Liquidity is the ability of the bank to fund asset growth and meet its obligations as they fall due without incurring acceptable losses. The fundamental role of banks in the maturity transformation of short-term deposits into long-term loans makes banks inherently vulnerable to liquidity risk, both of an institution-specific nature and that which affects markets as a whole. Virtually every financial transaction or commitment has implications for a bank’s liquidity. Effective liquidity risk management helps ensure a bank's ability to meet cash flow obligations, which are uncertain as they are affected by external events and other agents' behavior. Liquid assets are those that can be converted to cash quickly if needed to meet financial obligations; examples of liquid assets generally include cash, central bank reserves, and government debt.
The liquidity problem of banks is primarily and basically the problem of assuring that there will be an adequate amount of cash on hand, when needed, to meet all demands for cash. The task of providing sufficient cash presents itself in two ways: the individual bank, if it is to stay in business, must be able to meet all demands for cash including those resulting from the transfer of money to other banks in the system; and banks as a whole must be able to supply whatever demands are made upon them for the purpose of drawing money out of the system, whether abroad or for use in domestic circulation. A bank should acquire proper liquidities when needed immediately at a sensible cost. Though sustaining the optimal level of liquidity is a real art of bank’s management.
In context of Nepal, there are very few or almost no studies related to determinants of commercial banks’ liquidity. It is very essential to study in the context of Nepal whether various independent variables like capital adequacy ratio, return on assets, return on equity, non-performing loan ratio, credit to deposit ratio, bank size, net interest margin and total deposits to total assets ratio affects bank’s liquidity or not. Nepal’s banking sector has been passing through ups and downs in the last few years. For instance, Nepal faced the liquidity crunch a few years ago and now the banking sector has problems of excessive liquidity. There are various research conducted on determinants of liquidity in different countries such as Malaysia, Pakistan, Tunisia, etc. but almost no single research has been conducted on determinants of liquidity in Nepal. Though, a number of studies in various developing and developed countries have been conducted, findings of these studies may not be applied in Nepalese context. The study attempts to explore the various factors affecting determinants of liquidity of Nepalese commercial bank.
For this study, the sample includes all the commercial banks whose data is available for the study period 2007/08 -2013/14. After analyzing the total population (i.e. 30 commercial banks from financial statement analysis of Nepal Rastra Bank) the sample of 18 banks is selected. This study used seven years secondary data from different sources. The data regarding different variables are collected from the NRB supervision report and statistical report issued by NRB. Descriptive statistics, correlation analysis and regressions have been carried out to examine the secondary data. To achieve the objectives of this study, a model was developed using liquidity as the dependent variable and capital adequacy ratio, return on assets, return on equity, non-performing loan ratio, credit to deposit ratio, bank size, net interest margin and total deposit to total assets ratio as independent variables.
Based on the results, capital adequacy ratio, non-performing loan ratio, credit to deposits ratio, bank size and total deposits to total assets ratio are among the most dominant variables that affect the banks liquidity in the context of Nepalese commercial banks. Capital adequacy ratio, return on equity, bank size, net interest margin and total deposit to total assets ratio are negatively correlated with liquid assets to total assets ratio. Return on assets, non-performing loan ratio and credit to deposit ratio are positively related with liquid assets to total assets ratio. Likewise, return on assets, non-performing loan ratio and bank size total loans to total assets ratio are negatively correlated with total loans to total assets ratio. Capital adequacy ratio, return on equity, credit to deposit ratio, net interest margin and total deposit to total assets ratio are positively correlated with total loans to total assets ratio.
The recommendation put forward by this study is that capital adequacy ratio, non-performing loan ratio, credit to deposits ratio, bank size and total deposits to total assets ratio are most determining variables of banks’ liquidity so banks must consider these as important variables to make the decision related to liquidity of bank. Hence, it is recommended for all the banks to take preventive measures before the banks face illiquidity problems.
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Barcode Call number Media type Location Section Status 151/D 338.43 SHA Thesis/Dissertation Uniglobe Library Social Sciences Available
Title : Determinants of liquidity of Nepalese commercial banks Material Type: printed text Authors: Sristi Shrestha, Author Publication Date: 2014 Pagination: 86p. Size: GRP/Thesis Accompanying material: 2/B General note: Including bibilography Languages : English Descriptors: Banks
Banks and banking
Commercial banks
Liquidity (Economics)
NepalKeywords: 'liquidity economics nepal commercial banks banks' Class number: 332.632 Determinants of liquidity of Nepalese commercial banks [printed text] / Sristi Shrestha, Author . - 2014 . - 86p. ; GRP/Thesis + 2/B.
Including bibilography
Languages : English
Descriptors: Banks
Banks and banking
Commercial banks
Liquidity (Economics)
NepalKeywords: 'liquidity economics nepal commercial banks banks' Class number: 332.632 Hold
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Barcode Call number Media type Location Section Status 66/D 332.632 SHR Thesis/Dissertation Uniglobe Library Social Sciences Available
Title : Effect of capital and liquidity risk on the profitability of Nepalese commercial banks Material Type: printed text Authors: Sita Chaudhary, Author Pagination: 117p. Size: GRP/Thesis Accompanying material: 10/B Languages : English Descriptors: Liquidity (Economics) Class number: 658.152 Abstract: Commercial banking is one of the important factor of Nepalese economy. Commercial banks are the main pillar of the financial system in Nepal. It makes the flow of resources for the rest of the character of the economy. Finance is life blood of the trade, commerce and are the vanes in the circulation of the funds in economy. Growth of any country depends upon the strong banking and financial system. As most of the economic depression are the result of the banking system failure. The importance of the banking sectors is immense in the progress and richness of any state. The economic development and prosperity comes from the well-developed and perfect banking system. Strong banking system plays important role in efficient allocation and utilization of credit. Bank is a backbone of all the industries, because every transaction where money is involved, the bank is the main pillar of funding (Haque& Tariq, 2012).
Capital adequacy ratio is one of the most significant current issues in banking which evaluate the amount of a bank’s efficiency and stability. Capital adequacy generally affects all entities. But as a term, it is most often used in discussing the position of firms in the financial section of the economy, and precisely, whether firms have sufficient capital to cover the risks that they confront (Abba, 2013).Jinghan (2010) asserts that banks need a high degree of liquidity in their assets portfolio. The bank must hold a sufficient large proportion of its assets the form of cash and liquid assets for the purpose enhancing customers’ confidence and corporate performance (profitability). According to Christian et al. (2008), capital adequacy measures provide significant information regarding a firm's returns; while a few of the individual variables representing asset quality and earnings are informative. Size and growth and loan exposure measures do not appear to have any significant explanatory power when examining returns.
This study attempts to explore the effect of capital and liquidity risk on performance of selected commercial banks in context of Nepal. This study is based on the secondary data for 20 commercial banks with 120 observations for the period of 2010/11 to 2015/16. The data and information are collected from various issues of Banking and Financial Statistics, Bank Supervision Report published by NRB and annual reports of the selected commercial banks. The research design adopted in this study is descriptive and causal comparative research design as this study examines the impact of capital adequacy ratio, debt to assets ratio, debt to equity ratio, non-performing loan ratio, liquidity ratio, quick ratio and bank size on performance of Nepalese commercial banks.
The result shows that average return on assets is highest for ADBL (2.90 percent) and lowest for JBNL (0.62 percent). The average earning per share is highest for EBL (82.28 rupees) and lowest for JBNL (5.09 rupees). The average capital adequacy ratio is highest for JBNL (18.47 percent) and lowest for NBL (0.95 percent). Similarly, average debt to assets ratio is highest for NBL (100.27 percent) and lowest for JBNL (85.45 percent). The average debt to equity ratio is highest for NSBI (15.92 times) and NBL (-7.31 times). Likewise, average liquidity ratio is highest for SCB (32.27 percent) and lowest for ADBL (8.21 percent). The average quick ratio is highest for SCBL (26.29 percent) and lowest SIDBL (9.94 percent). The average non-performing loan ratio is highest for NBB (14.48 percent) and lowest for SCB (0.13 percent) and average bank size is highest for EBL (RS. 25.50 billion) and lowest for JBNL (Rs. 23.41 billion).
The descriptive statistics for selected commercial bank shows that the average return on assets, earnings per share, capital adequacy ratio, debt to assets ratio, non-performing loan ratio, liquidity ratio, quick ratio, and bank size are 1.59 percent, 33.07 rupees, 12.34 percent, 91.37 percent, 9.37 times, 2.63 percent, 17.26 percent, and Rs. 24.58 billion.
The correlation matrix of selected commercial banks shows that capital adequacy ratio is positively correlated with return on assets. Similarly, quick ratio have positive relationship with return on assets. There is positive relationship of bank size with return on assets. However, there is negative relationship of debt to assets ratio, debt to equity ratio, liquidity ratio and non-performing asset ratio with return on assets. The result also shows that there is positive relationship of capital adequacy ratio, quick ratio and bank size and with earnings per share. However, there is negative relationship of debt to assets ratio, non-performing loan ratio, liquidity ratio, and debt to equity ratio with earnings per share.
The regression results indicate that capital adequacy ratio and quick ratio has positive impact on return on assets. Similarly, bank size has positive impact on return on assets. This study also reveals that debt to assets ratio debt to equity ratio, liquidity ratio and non-performing loan ratio has negative impact on the return on assets. Likewise, results shows that the capital adequacy ratio and quick ratio has positive impact on earnings per share. Similarly, bank size has positive impact on earnings per share. However, results shows that the debt to assets ratio, debt to equity ratio, non-performing loan ratio, and liquidity ratio has negative impact on earnings per share.
Effect of capital and liquidity risk on the profitability of Nepalese commercial banks [printed text] / Sita Chaudhary, Author . - [s.d.] . - 117p. ; GRP/Thesis + 10/B.
Languages : English
Descriptors: Liquidity (Economics) Class number: 658.152 Abstract: Commercial banking is one of the important factor of Nepalese economy. Commercial banks are the main pillar of the financial system in Nepal. It makes the flow of resources for the rest of the character of the economy. Finance is life blood of the trade, commerce and are the vanes in the circulation of the funds in economy. Growth of any country depends upon the strong banking and financial system. As most of the economic depression are the result of the banking system failure. The importance of the banking sectors is immense in the progress and richness of any state. The economic development and prosperity comes from the well-developed and perfect banking system. Strong banking system plays important role in efficient allocation and utilization of credit. Bank is a backbone of all the industries, because every transaction where money is involved, the bank is the main pillar of funding (Haque& Tariq, 2012).
Capital adequacy ratio is one of the most significant current issues in banking which evaluate the amount of a bank’s efficiency and stability. Capital adequacy generally affects all entities. But as a term, it is most often used in discussing the position of firms in the financial section of the economy, and precisely, whether firms have sufficient capital to cover the risks that they confront (Abba, 2013).Jinghan (2010) asserts that banks need a high degree of liquidity in their assets portfolio. The bank must hold a sufficient large proportion of its assets the form of cash and liquid assets for the purpose enhancing customers’ confidence and corporate performance (profitability). According to Christian et al. (2008), capital adequacy measures provide significant information regarding a firm's returns; while a few of the individual variables representing asset quality and earnings are informative. Size and growth and loan exposure measures do not appear to have any significant explanatory power when examining returns.
This study attempts to explore the effect of capital and liquidity risk on performance of selected commercial banks in context of Nepal. This study is based on the secondary data for 20 commercial banks with 120 observations for the period of 2010/11 to 2015/16. The data and information are collected from various issues of Banking and Financial Statistics, Bank Supervision Report published by NRB and annual reports of the selected commercial banks. The research design adopted in this study is descriptive and causal comparative research design as this study examines the impact of capital adequacy ratio, debt to assets ratio, debt to equity ratio, non-performing loan ratio, liquidity ratio, quick ratio and bank size on performance of Nepalese commercial banks.
The result shows that average return on assets is highest for ADBL (2.90 percent) and lowest for JBNL (0.62 percent). The average earning per share is highest for EBL (82.28 rupees) and lowest for JBNL (5.09 rupees). The average capital adequacy ratio is highest for JBNL (18.47 percent) and lowest for NBL (0.95 percent). Similarly, average debt to assets ratio is highest for NBL (100.27 percent) and lowest for JBNL (85.45 percent). The average debt to equity ratio is highest for NSBI (15.92 times) and NBL (-7.31 times). Likewise, average liquidity ratio is highest for SCB (32.27 percent) and lowest for ADBL (8.21 percent). The average quick ratio is highest for SCBL (26.29 percent) and lowest SIDBL (9.94 percent). The average non-performing loan ratio is highest for NBB (14.48 percent) and lowest for SCB (0.13 percent) and average bank size is highest for EBL (RS. 25.50 billion) and lowest for JBNL (Rs. 23.41 billion).
The descriptive statistics for selected commercial bank shows that the average return on assets, earnings per share, capital adequacy ratio, debt to assets ratio, non-performing loan ratio, liquidity ratio, quick ratio, and bank size are 1.59 percent, 33.07 rupees, 12.34 percent, 91.37 percent, 9.37 times, 2.63 percent, 17.26 percent, and Rs. 24.58 billion.
The correlation matrix of selected commercial banks shows that capital adequacy ratio is positively correlated with return on assets. Similarly, quick ratio have positive relationship with return on assets. There is positive relationship of bank size with return on assets. However, there is negative relationship of debt to assets ratio, debt to equity ratio, liquidity ratio and non-performing asset ratio with return on assets. The result also shows that there is positive relationship of capital adequacy ratio, quick ratio and bank size and with earnings per share. However, there is negative relationship of debt to assets ratio, non-performing loan ratio, liquidity ratio, and debt to equity ratio with earnings per share.
The regression results indicate that capital adequacy ratio and quick ratio has positive impact on return on assets. Similarly, bank size has positive impact on return on assets. This study also reveals that debt to assets ratio debt to equity ratio, liquidity ratio and non-performing loan ratio has negative impact on the return on assets. Likewise, results shows that the capital adequacy ratio and quick ratio has positive impact on earnings per share. Similarly, bank size has positive impact on earnings per share. However, results shows that the debt to assets ratio, debt to equity ratio, non-performing loan ratio, and liquidity ratio has negative impact on earnings per share.
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Barcode Call number Media type Location Section Status 358/D 658.152 CHA Thesis/Dissertation Uniglobe Library Technology Available
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