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Title : Credit risk management Material Type: printed text Authors: G Vijayaragavan, Author Publisher: Himalayan house Pagination: 254p. Size: Books Accompanying material: p Price: Rs.279 Languages : English Descriptors: Bank management
Credit-ManagementKeywords: 'bank loan banks and banking credit management' Class number: 332.175 Credit risk management [printed text] / G Vijayaragavan, Author . - Mumbai, India : Himalayan house, [s.d.] . - 254p. ; Books + p.
Rs.279
Languages : English
Descriptors: Bank management
Credit-ManagementKeywords: 'bank loan banks and banking credit management' Class number: 332.175 Hold
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Barcode Call number Media type Location Section Status 6440 332.175 VIJ Books Uniglobe Library Social Sciences Due for return by 09/28/2024 6441 332.175 VIJ Books Uniglobe Library Social Sciences Due for return by 09/22/2024 6442 332.175 VIJ Books Uniglobe Library Social Sciences Due for return by 09/28/2024 6443 332.175 VIJ Books Uniglobe Library Social Sciences Due for return by 12/12/2017 6445 332.175 VIJ Books Uniglobe Library Social Sciences Due for return by 09/30/2024 6446 332.175 VIJ Books Uniglobe Library Social Sciences Due for return by 09/30/2024 6447 332.175 VIJ Books Uniglobe Library Social Sciences Due for return by 10/05/2024 6448 332.175 VIJ Books Uniglobe Library Social Sciences Due for return by 09/28/2024 6449 332.175 VIJ Books Uniglobe Library Social Sciences Due for return by 09/28/2024 6450 332.175 VIJ Books Uniglobe Library Social Sciences Due for return by 10/02/2024 6451 332.175 VIJ Books Uniglobe Library Social Sciences Due for return by 10/01/2024 6452 332.175 VIJ Books Uniglobe Library Social Sciences Due for return by 10/05/2024 6453 332.175 VIJ Books Uniglobe Library Social Sciences Due for return by 10/01/2024 6454 332.175 VIJ Books Uniglobe Library Social Sciences Due for return by 10/01/2024 6455 332.175 VIJ Books Uniglobe Library Social Sciences Due for return by 10/02/2024 6456 332.175 VIJ Books Uniglobe Library Social Sciences Due for return by 10/02/2024 6457 332.175 VIJ Books Uniglobe Library Social Sciences Due for return by 09/28/2024 6458 332.175 VIJ Books Uniglobe Library Social Sciences Due for return by 10/03/2024 6459 332.175 VIJ Books Uniglobe Library Social Sciences Due for return by 10/05/2024 6460 332.175 VIJ Books Uniglobe Library Social Sciences Due for return by 10/02/2024 6461 332.175 VIJ Books Uniglobe Library Social Sciences Due for return by 04/01/2018 6462 332.175 VIJ Books Uniglobe Library Social Sciences Due for return by 09/30/2024 6463 332.175 VIJ Books Uniglobe Library Social Sciences Due for return by 03/07/2022 6464 332.175 VIJ Books Uniglobe Library Social Sciences Due for return by 09/29/2024 6444 332.175 VIJ Books Uniglobe Library Social Sciences Due for return by 10/05/2024 10796 332.175 VIJ Books Uniglobe Library Social Sciences Due for return by 10/05/2024 10797 332.175 VIJ Books Uniglobe Library Social Sciences Due for return by 10/02/2023 10798 332.175 VIJ Books Uniglobe Library Social Sciences Due for return by 10/06/2024
Title : The impact of credit risk management on profitability of commercial banks in Nepal Material Type: printed text Authors: Divash Shakya, Author Publication Date: 2016 Pagination: 81p. Size: GRP/Thesis Accompanying material: 5/B General note: Including bibilography Languages : English Descriptors: Bank loans-Management
Banks
Banks and banking
Commercial banks
Consumer credit-Management
Credit-Management
Financial risk management
Risk managementKeywords: 'credit risk management commercial banks return on equity return on assets banks loan' Class number: 332.7 Abstract: Commercial banks are the major financial intermediaries in any economy and they are the major providers of credits to the household and corporate sector and operate the payment mechanism (Magnifique, 2011). In today’s fast-moving business environment, banks are exposed to a large number of risks such as credit risk, liquidity risk, market risk, operational risk, interest rate exchange risk etc For instance, commercial banks hold deposits, bundling them together as loans, operating payments mechanism etc. Particularly, banks make profits by selling liabilities with one set of characteristics (a particular combination of liquidity risk and return) and using the proceeds to buy assets with different set of characteristics i.e. asset transformation. Credit risk management should be at the centre of banks operations in order to maintain financial sustainability and reaching more clients. Nzuve (2016) stated credit risk management models included the systems, procedures and control which a company has in place to ensure the efficient collection of customer payments and the risk of non-payment.
The major purpose of this study is to identify the relationship between credit risk and bank performance in Nepalese commercial banks. The specific objectives are: to analyze the structure and pattern of dependent (ROA and ROE) and independent variables (NPL, cost per loan assets, capital adequacy, cash reserve ratio, leverage and assets growth ratio), to examine the relationship between non-performing loan ratio and bank performance, to identify the effect of cost per loan assets, cash reserve ratio, leverage, assets growth ratio and capital adequacy ratio on bank performance and to determine the major variable influencing the performance of Nepalese commercial banks.
This study based on the secondary of data which were gather for a sample of 18 commercial banks of Nepal within the time period from 2007/08 to 2013/14, leading to the total of 126 observations. The secondary data have been obtain from Nepal Rastra Bank bulletin published by central bank of Nepal, annual audited financial statements and websites of respective commercial banks. The polled cross-sectional data analysis has been undertaken in the study. The research design adopted in this study is causal comparative types as it deals with relationship of bank specific factors like capital adequacy ratio, non-performing loan ratio, cost per loan assets, cash reserve ratio, assets growth ratio and leverage ratio with dependent variable such as: ROA (return on assets) and ROE (return on equity). The statistical methods used in the analysis are descriptive statistics, correlation analysis and regression analysis.
The result shows that capital adequacy ratio, cost per loan assets and assets growth ratio are positively related with return on assets and return on equity. It indicates that higher the capital adequacy ratio, higher would be the return on assets and return on equity. Similarly, increase in cost per loan assets leads to an increase in return on assets and return on equity. Likewise, higher the assets growth ratio, higher would be the return on assets and return on equity. The results also shows that non-performing loan ratio, cash reserve ratio and leverage ratio are negatively related with return on assets and return on equity which reveals that increase in non-performing loan ratio leads to decrease in return on assets and return on equity. Similarly, higher the cash reserve ratio, lower would be the return on assets and return on equity. Likewise, increase in leverage ratio leads to a decrease in return on assets and return on equity. The beta coefficient is positive for capital adequacy ratio, cost per loan assets and assets growth ratio and bank performance whereas the beta coefficient is negative for non-performing loan ratio, cash reserve ratio and leverage ratio and bank performance. The beta coefficient is significant for capital adequacy ratio, non-performing loan ratio, assets growth ratio and leverage ratio at 5 percent level of significance.
The major conclusion of this study is that bank performance of Nepalese commercial banks is affected by credit risk factors and its management. Capital adequacy ratio, cost per loan assets and assets growth ratio is an internal factor which have significant positive effect on return on assets of Nepalese commercial banks. It indicates higher the capital adequacy ratio, cost per loan assets and assets growth ratio, higher would be the return on assets. However, non-performing loan ratio, cash reserve ratio and leverage ratio have significant negative effect on return on assets. It indicates that higher the non-performing loan, cash reserve ratio and leverage ratio, lower would be the return on assets. The study also concludes that capital adequacy ratio, cost per loan assets and assets growth ratio have significant positive effect on return on equity of Nepalese commercial banksThe impact of credit risk management on profitability of commercial banks in Nepal [printed text] / Divash Shakya, Author . - 2016 . - 81p. ; GRP/Thesis + 5/B.
Including bibilography
Languages : English
Descriptors: Bank loans-Management
Banks
Banks and banking
Commercial banks
Consumer credit-Management
Credit-Management
Financial risk management
Risk managementKeywords: 'credit risk management commercial banks return on equity return on assets banks loan' Class number: 332.7 Abstract: Commercial banks are the major financial intermediaries in any economy and they are the major providers of credits to the household and corporate sector and operate the payment mechanism (Magnifique, 2011). In today’s fast-moving business environment, banks are exposed to a large number of risks such as credit risk, liquidity risk, market risk, operational risk, interest rate exchange risk etc For instance, commercial banks hold deposits, bundling them together as loans, operating payments mechanism etc. Particularly, banks make profits by selling liabilities with one set of characteristics (a particular combination of liquidity risk and return) and using the proceeds to buy assets with different set of characteristics i.e. asset transformation. Credit risk management should be at the centre of banks operations in order to maintain financial sustainability and reaching more clients. Nzuve (2016) stated credit risk management models included the systems, procedures and control which a company has in place to ensure the efficient collection of customer payments and the risk of non-payment.
The major purpose of this study is to identify the relationship between credit risk and bank performance in Nepalese commercial banks. The specific objectives are: to analyze the structure and pattern of dependent (ROA and ROE) and independent variables (NPL, cost per loan assets, capital adequacy, cash reserve ratio, leverage and assets growth ratio), to examine the relationship between non-performing loan ratio and bank performance, to identify the effect of cost per loan assets, cash reserve ratio, leverage, assets growth ratio and capital adequacy ratio on bank performance and to determine the major variable influencing the performance of Nepalese commercial banks.
This study based on the secondary of data which were gather for a sample of 18 commercial banks of Nepal within the time period from 2007/08 to 2013/14, leading to the total of 126 observations. The secondary data have been obtain from Nepal Rastra Bank bulletin published by central bank of Nepal, annual audited financial statements and websites of respective commercial banks. The polled cross-sectional data analysis has been undertaken in the study. The research design adopted in this study is causal comparative types as it deals with relationship of bank specific factors like capital adequacy ratio, non-performing loan ratio, cost per loan assets, cash reserve ratio, assets growth ratio and leverage ratio with dependent variable such as: ROA (return on assets) and ROE (return on equity). The statistical methods used in the analysis are descriptive statistics, correlation analysis and regression analysis.
The result shows that capital adequacy ratio, cost per loan assets and assets growth ratio are positively related with return on assets and return on equity. It indicates that higher the capital adequacy ratio, higher would be the return on assets and return on equity. Similarly, increase in cost per loan assets leads to an increase in return on assets and return on equity. Likewise, higher the assets growth ratio, higher would be the return on assets and return on equity. The results also shows that non-performing loan ratio, cash reserve ratio and leverage ratio are negatively related with return on assets and return on equity which reveals that increase in non-performing loan ratio leads to decrease in return on assets and return on equity. Similarly, higher the cash reserve ratio, lower would be the return on assets and return on equity. Likewise, increase in leverage ratio leads to a decrease in return on assets and return on equity. The beta coefficient is positive for capital adequacy ratio, cost per loan assets and assets growth ratio and bank performance whereas the beta coefficient is negative for non-performing loan ratio, cash reserve ratio and leverage ratio and bank performance. The beta coefficient is significant for capital adequacy ratio, non-performing loan ratio, assets growth ratio and leverage ratio at 5 percent level of significance.
The major conclusion of this study is that bank performance of Nepalese commercial banks is affected by credit risk factors and its management. Capital adequacy ratio, cost per loan assets and assets growth ratio is an internal factor which have significant positive effect on return on assets of Nepalese commercial banks. It indicates higher the capital adequacy ratio, cost per loan assets and assets growth ratio, higher would be the return on assets. However, non-performing loan ratio, cash reserve ratio and leverage ratio have significant negative effect on return on assets. It indicates that higher the non-performing loan, cash reserve ratio and leverage ratio, lower would be the return on assets. The study also concludes that capital adequacy ratio, cost per loan assets and assets growth ratio have significant positive effect on return on equity of Nepalese commercial banksHold
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Barcode Call number Media type Location Section Status 239/D 332.7 SHA Thesis/Dissertation Uniglobe Library Social Sciences Available
Title : The impact of credit risk on the performance of Nepalese commercial Bank Material Type: printed text Authors: Laxmi Karki, Author Publication Date: 2016 Pagination: 128p. Size: GRP/Thesis Accompanying material: 6/B Languages : English Descriptors: Credit-Management Class number: 332.7 Abstract: Commercial banks play an important role for economic development, and foster economic growth of any country through their intermediation role and financial services that they provide to community and nations. Commercial banks are the major sources of credit for business firms and households in many countries. Among risks in banking operation credit risk which is related to substantial amount of income generating assets is found to be important determinant of bank performance (Rose & Hudgins, 2005). Credit risk plays an important role on banks profitability since a large chunk of banks revenue accrues from loans from which interest is derived. Adequately managing credit risk in financial institutions is critical for the survival and growth of the financial institutions (Oke et al., 2012).
The default of loans and advances poses serious setbacks not only for borrowers and lenders but also to the entire economy of a country. The long term success of any banking institution depended on effective system that ensures repayments of loans by borrowers which were critical in dealing with asymmetric information problems, thus, reduced the level of loan losses (Kargi, 2011). Prakash & Poudel (2012) state that credit risk management is important predictor of financial performance of commercial banks. The success of bank performance depends on effectiveness of credit risk management. The factor affecting Nepalese commercial bank performance for the period of 2011 to 2012 are followed by the linear regression techniques Poudel (2012). The study revealed a significant inverse relationship between commercial bank performance measured by ROA and credit risk measured by default and capital adequacy ratio.
The study basically aims at evaluating the impact of credit risk on profitability of Nepalese commercial banks. The specific objectives are to investigate the impact of loan loss provisions ratio, capital adequacy ratio, loans and advances to deposit ratio and nonperforming loan ratio on banks profitability; to find out the relationship between performances and liquidity, leverage, deposit, growth of net interest income and bank size.
Ochei (2013), Dang (2011), Zaman (2011), Zoubi, (2007) and Agbada, (2013) found that there is positive relationship between credit risk and performance. Godlewski (2004), Bourke (1989), Amato (2007) and Rostami, (2011) stated that there is negative association between credit risk variable ad performance. In the context of Nepal, some studies have been done on the credit risk and performance such as Dhungana (2011), Jha (2012) and Poudel (2012). Still there is a gap in the financial literature concerning the effect of credit risk on the performance of Nepalese commercial bank.
The research design adopted in this study consists of descriptive and causal comparative research designs to deal with the various issues raised in this study. The study is based on pooled cross-sectional analysis of data of 18 commercial banks for the period 2007/08 to 2013/14. The necessary financial data are collected from the official websites of respected commercial banks and from the websites of Nepal Rastra Bank. Data were collected from annual reports of sample banks.
The study found that capital adequacy ratio, loan loss provision ratio and liquidity have positive and significant impact on ROA. Similarly loans and advance to total deposit ratio and leverage has positive and insignificant impact on ROA. Nonperforming loan ratio and bank size has negative and significant impact on ROA. This indicates that when there is higher nonperforming loan ratio and bank size then there would be lower return on assets. Similarly growth of net interest income and deposit has negative and insignificant impact on ROA. Loan loss provision ratio has positive and significant impact on ROE. This indicates that when there is higher loan loss provision ratio then there would be higher return on equity. Similarly capital adequacy ratio, loans and advance to total deposit ratio, liquidity, growth of net interest income and leverage has positive and insignificant impact on ROE. Nonperforming loan ratio has negative and significant impact on ROE. This indicates that when there is higher nonperforming loan ratio then there would be lower return on equity. Similarly bank size and deposit has negative and insignificant impact on ROE. Capital adequacy ratio and deposit has positive and significant impact on NIM. This indicates that when there is higher capital adequacy ratio and deposit then there would be higher net interest margin. Similarly loans and advance to total deposit ratio, loan loss provision ratio, liquidity and bank size has positive and insignificant impact on NIM. Similarly nonperforming loan ratio, leverage and growth of net interest income have negative and insignificant impact on NIM.
The impact of credit risk on the performance of Nepalese commercial Bank [printed text] / Laxmi Karki, Author . - 2016 . - 128p. ; GRP/Thesis + 6/B.
Languages : English
Descriptors: Credit-Management Class number: 332.7 Abstract: Commercial banks play an important role for economic development, and foster economic growth of any country through their intermediation role and financial services that they provide to community and nations. Commercial banks are the major sources of credit for business firms and households in many countries. Among risks in banking operation credit risk which is related to substantial amount of income generating assets is found to be important determinant of bank performance (Rose & Hudgins, 2005). Credit risk plays an important role on banks profitability since a large chunk of banks revenue accrues from loans from which interest is derived. Adequately managing credit risk in financial institutions is critical for the survival and growth of the financial institutions (Oke et al., 2012).
The default of loans and advances poses serious setbacks not only for borrowers and lenders but also to the entire economy of a country. The long term success of any banking institution depended on effective system that ensures repayments of loans by borrowers which were critical in dealing with asymmetric information problems, thus, reduced the level of loan losses (Kargi, 2011). Prakash & Poudel (2012) state that credit risk management is important predictor of financial performance of commercial banks. The success of bank performance depends on effectiveness of credit risk management. The factor affecting Nepalese commercial bank performance for the period of 2011 to 2012 are followed by the linear regression techniques Poudel (2012). The study revealed a significant inverse relationship between commercial bank performance measured by ROA and credit risk measured by default and capital adequacy ratio.
The study basically aims at evaluating the impact of credit risk on profitability of Nepalese commercial banks. The specific objectives are to investigate the impact of loan loss provisions ratio, capital adequacy ratio, loans and advances to deposit ratio and nonperforming loan ratio on banks profitability; to find out the relationship between performances and liquidity, leverage, deposit, growth of net interest income and bank size.
Ochei (2013), Dang (2011), Zaman (2011), Zoubi, (2007) and Agbada, (2013) found that there is positive relationship between credit risk and performance. Godlewski (2004), Bourke (1989), Amato (2007) and Rostami, (2011) stated that there is negative association between credit risk variable ad performance. In the context of Nepal, some studies have been done on the credit risk and performance such as Dhungana (2011), Jha (2012) and Poudel (2012). Still there is a gap in the financial literature concerning the effect of credit risk on the performance of Nepalese commercial bank.
The research design adopted in this study consists of descriptive and causal comparative research designs to deal with the various issues raised in this study. The study is based on pooled cross-sectional analysis of data of 18 commercial banks for the period 2007/08 to 2013/14. The necessary financial data are collected from the official websites of respected commercial banks and from the websites of Nepal Rastra Bank. Data were collected from annual reports of sample banks.
The study found that capital adequacy ratio, loan loss provision ratio and liquidity have positive and significant impact on ROA. Similarly loans and advance to total deposit ratio and leverage has positive and insignificant impact on ROA. Nonperforming loan ratio and bank size has negative and significant impact on ROA. This indicates that when there is higher nonperforming loan ratio and bank size then there would be lower return on assets. Similarly growth of net interest income and deposit has negative and insignificant impact on ROA. Loan loss provision ratio has positive and significant impact on ROE. This indicates that when there is higher loan loss provision ratio then there would be higher return on equity. Similarly capital adequacy ratio, loans and advance to total deposit ratio, liquidity, growth of net interest income and leverage has positive and insignificant impact on ROE. Nonperforming loan ratio has negative and significant impact on ROE. This indicates that when there is higher nonperforming loan ratio then there would be lower return on equity. Similarly bank size and deposit has negative and insignificant impact on ROE. Capital adequacy ratio and deposit has positive and significant impact on NIM. This indicates that when there is higher capital adequacy ratio and deposit then there would be higher net interest margin. Similarly loans and advance to total deposit ratio, loan loss provision ratio, liquidity and bank size has positive and insignificant impact on NIM. Similarly nonperforming loan ratio, leverage and growth of net interest income have negative and insignificant impact on NIM.
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Barcode Call number Media type Location Section Status 183/D 332.7 KAR Books Uniglobe Library Social Sciences Available
Title : The relationship between risk management and financial performance of commercial banks in Nepal: a comparative study of public banks, joint venture banks and private banks Material Type: printed text Authors: Suresh Karki, Author Publication Date: 2016 Pagination: 115p. Size: GRP/Thesis Accompanying material: 8/B Languages : English Descriptors: Credit-Management Class number: 332.7 Abstract: Commercial banks play an important role for economic development and foster economic growth by providing number of financial services. One of the important functions of the commercial banks is the financial intermediation functions and thus it transfers the fund from surplus units to the deficit units. It accepts deposits and provides loan and advances to the needed people, institutions and investors. It also invests in several short term and long term projects. Thus, it is constantly facing different types of risk. The risky lending increases the profitability in one hand while on the other hand, it can lead to the bank failure too if cannot be managed properly. In such circumstances, credit character, credit monitoring, repayment capacity of borrower, liquidity, operating expense, interest rate spread, debt to equity ratio, capital adequacy ratio and the concept of prudent lending plays a great role for analyzing the impact of risk management on the financial performance in the context of commercial banks of Nepal. The survival and success of a financial organization depends critically on the efficiency of managing these risks (Khan & Ahmed, 2001).
There are differences in public sector banks, joint venture banks and domestic private banks in terms of profitability, capital adequacy, asset quality, riskiness, size, liquidity and management effectiveness. Matthew & Esther (2012) revealed foreign banks have more liquidity, capital adequacy, size, and asset quality than domestic banks.Francis (2007) revealed that capital adequacy and credit risk have positive effect on bank profitability. However, operational efficiency and liquidity ratio were negatively and significantly related to bank profitability.Gaur & Gupta (2011) supported the positive relationship arguing that experience through age helps the business to perform better. Ngetich&Wanjau (2011) argued banks which perform well manage to keep interest spread wide.
The major objective of the study is to assess the relationship between risk management and financial performance 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 risk management and financial performance 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 debt to equity ratio is highest for NSBI (14.12 times), average liquidity ratio is highest for NCC (35.11 times), average operating expense ratio is highest for NBL (90.15 percent), average interest rate spread is highest for NBL (6.84 percent) and average capital adequacy ratio is highest for JBL (14.33 percent).
The descriptive statistics for the public banks reveals that the average return on assets, return on equity, debt to equity ratio,liquidity ratio, operating expense ratio, inflation rate, interest rate spread, capital adequacy ratiois 1.92 percent, -6.12 percent, -13.23 times, 3.06 times, 72.62 percent, 8.95 percent, 5.95 percent, 2.57 percent and is 56.39 years respectively. Similarly, the descriptive statistics for the joint venture banks reveals that the average return on assets, return on equity, debt to equity ratio,liquidity ratio, operating expense ratio, inflation rate,interest rate spread, capital adequacy ratio and age is 2.15 percent, 23.47 percent, 10.77 times, 10.58 times, 34.88 percent, 8.95 percent, 4.46 percent, 11.84 percent and 22.67 years respectively. Likewise, the descriptive statistics for the private bank reveals that the average return on assets, return on equity, debt to equity ratio, liquidity ratio, operating expense ratio, inflation rate, interest rate spread, capital adequacy ratio and age is 1.38 percent, 13.45 percent, 8.91 times, 17.73 times, 40.03 percent, 8.95 percent, 3.96 percent, 14.40 percent and 11.71 years respectively.
In the case of public banks, the study found that liquidity ratio, operating expense ratio, and age have negative relationship with return on assets.Results also show that capital adequacy ratio and debt to equity ratio is positively related to the return on assets. Similarly, in the case of joint venture banks, debt to equity ratio and operating expense ratio are negatively related to return on assets and return on equity. On the other hand, results also show that interest rate spread is positively related to the return on assets .The results show that operating expense ratio, capital adequacy ratio and liquidity ratio are negatively related to the performance of private banks. However, results show that interest rate spread and age have positive relationship with performance of the private banks.
The regression results show that age, operating expense ratio and liquidity ratio have negative and significant impact on return on assets in the case of public banks. However, results show that age have positive and significant impact on banks performance in the case of private banks. Likewise, results show that beta coefficients are positive and significant for capital adequacy ratio for public and joint venture banks whereas beta coefficients are negative in the context of private banks. However, coefficients are not significant. Likewise, the results in the case of joint venture banks show that beta coefficients are positive for interest rate spread and capital adequacy ratio, where beta coefficients are significant at 5 percent level of significance. Thus, operating expense ratio, interest rate spread, debt to equity ratio, capital adequacy ratio and liquidity are the major factors affecting the profitability of Nepalese commercial banks.
The relationship between risk management and financial performance of commercial banks in Nepal: a comparative study of public banks, joint venture banks and private banks [printed text] / Suresh Karki, Author . - 2016 . - 115p. ; GRP/Thesis + 8/B.
Languages : English
Descriptors: Credit-Management Class number: 332.7 Abstract: Commercial banks play an important role for economic development and foster economic growth by providing number of financial services. One of the important functions of the commercial banks is the financial intermediation functions and thus it transfers the fund from surplus units to the deficit units. It accepts deposits and provides loan and advances to the needed people, institutions and investors. It also invests in several short term and long term projects. Thus, it is constantly facing different types of risk. The risky lending increases the profitability in one hand while on the other hand, it can lead to the bank failure too if cannot be managed properly. In such circumstances, credit character, credit monitoring, repayment capacity of borrower, liquidity, operating expense, interest rate spread, debt to equity ratio, capital adequacy ratio and the concept of prudent lending plays a great role for analyzing the impact of risk management on the financial performance in the context of commercial banks of Nepal. The survival and success of a financial organization depends critically on the efficiency of managing these risks (Khan & Ahmed, 2001).
There are differences in public sector banks, joint venture banks and domestic private banks in terms of profitability, capital adequacy, asset quality, riskiness, size, liquidity and management effectiveness. Matthew & Esther (2012) revealed foreign banks have more liquidity, capital adequacy, size, and asset quality than domestic banks.Francis (2007) revealed that capital adequacy and credit risk have positive effect on bank profitability. However, operational efficiency and liquidity ratio were negatively and significantly related to bank profitability.Gaur & Gupta (2011) supported the positive relationship arguing that experience through age helps the business to perform better. Ngetich&Wanjau (2011) argued banks which perform well manage to keep interest spread wide.
The major objective of the study is to assess the relationship between risk management and financial performance 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 risk management and financial performance 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 debt to equity ratio is highest for NSBI (14.12 times), average liquidity ratio is highest for NCC (35.11 times), average operating expense ratio is highest for NBL (90.15 percent), average interest rate spread is highest for NBL (6.84 percent) and average capital adequacy ratio is highest for JBL (14.33 percent).
The descriptive statistics for the public banks reveals that the average return on assets, return on equity, debt to equity ratio,liquidity ratio, operating expense ratio, inflation rate, interest rate spread, capital adequacy ratiois 1.92 percent, -6.12 percent, -13.23 times, 3.06 times, 72.62 percent, 8.95 percent, 5.95 percent, 2.57 percent and is 56.39 years respectively. Similarly, the descriptive statistics for the joint venture banks reveals that the average return on assets, return on equity, debt to equity ratio,liquidity ratio, operating expense ratio, inflation rate,interest rate spread, capital adequacy ratio and age is 2.15 percent, 23.47 percent, 10.77 times, 10.58 times, 34.88 percent, 8.95 percent, 4.46 percent, 11.84 percent and 22.67 years respectively. Likewise, the descriptive statistics for the private bank reveals that the average return on assets, return on equity, debt to equity ratio, liquidity ratio, operating expense ratio, inflation rate, interest rate spread, capital adequacy ratio and age is 1.38 percent, 13.45 percent, 8.91 times, 17.73 times, 40.03 percent, 8.95 percent, 3.96 percent, 14.40 percent and 11.71 years respectively.
In the case of public banks, the study found that liquidity ratio, operating expense ratio, and age have negative relationship with return on assets.Results also show that capital adequacy ratio and debt to equity ratio is positively related to the return on assets. Similarly, in the case of joint venture banks, debt to equity ratio and operating expense ratio are negatively related to return on assets and return on equity. On the other hand, results also show that interest rate spread is positively related to the return on assets .The results show that operating expense ratio, capital adequacy ratio and liquidity ratio are negatively related to the performance of private banks. However, results show that interest rate spread and age have positive relationship with performance of the private banks.
The regression results show that age, operating expense ratio and liquidity ratio have negative and significant impact on return on assets in the case of public banks. However, results show that age have positive and significant impact on banks performance in the case of private banks. Likewise, results show that beta coefficients are positive and significant for capital adequacy ratio for public and joint venture banks whereas beta coefficients are negative in the context of private banks. However, coefficients are not significant. Likewise, the results in the case of joint venture banks show that beta coefficients are positive for interest rate spread and capital adequacy ratio, where beta coefficients are significant at 5 percent level of significance. Thus, operating expense ratio, interest rate spread, debt to equity ratio, capital adequacy ratio and liquidity are the major factors affecting the profitability of Nepalese commercial banks.
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Barcode Call number Media type Location Section Status 255/D 332.7 KAR Thesis/Dissertation Uniglobe Library Social Sciences Available
