| Title : | Factors affecting risk taking behavior in Nepalese commercial banks | | Material Type: | printed text | | Authors: | Subodh Adhikari, Author | | Pagination: | 87p. | | Size: | GRP/Thesis | | Accompanying material: | 2/B | | General note: | Including bibliography | | Languages : | English | | Descriptors: | Banks
Commercial banks
Nepal
Risk taking behavior
| | Keywords: | 'risk behavior banks commercial banks Nepal' | | Class number: | 332.16 | | Abstract: | Liquidity risk, credit risk, market risk, operational risk, interest rate risk etc have always been along with banks. But, since bearing risk is an integral part of banking business, it is not surprising that banks have been practicing risk management ever since there have been banks- the industry could not have survived without it. The only real change is the degree of sophistication now required to reflect the more complex and fast-paced environment. Thus, it is essential to identify the factors that affect risk taking of banks, so that risk management technique could be used more efficiently and effectively. This study attempts to identify the factors that affect the risk taking behavior of the commercial banks operating in Nepal.
This study determines the factors affecting the risk taking behavior of selected commercial banks of Nepal. The specific objectives of this study were to analyze the relationship between credit risk and capital requirement, foreign investment, ex-NRB officers, loan growth rate, non performing loan, return on assets and log of total assets, to investigate the relationship between liquidity risk and capital requirement, foreign investment, ex- NRB officers, log of total assets, credit to deposit ratio, cash reserve ratio and bank lending rate, to examine the impact of capital requirement, foreign investment, ex-NRB officers, log of total assets, GDP, Inflation and net interest margin on market risk of the bank, to assess the employees views on bank risk taking behavior.
The research was based on both the primary and secondary data with methods such as descriptive statistics and regression analysis for secondary data analysis and percentage frequency distribution and likert scale for primary data analysis.
This study concludes that the presence of foreign investors and Ex-NRB officers seems to be affecting the level of risk taken by banks. It is also concluded that regulatory capital requirement also plays important role in determining the risk taken by banks. Besides, the study also concludes that nonperforming loan and return on assets explain the credit risk of the bank. This means the banks should focus these variables in order to maintain the credit risk of the bank. Similarly, capital requirement and credit to deposit ratio explain the liquidity risk of the bank. Likewise capital requirement, ex-off, bank size and inflation explain the market risk of the bank. Similarly in the case of primary study, the study concludes that rules and regulations formulated by central bank determine the level of risk taken by the bank. The rules and regulation regarding minimum cash reserve requirement, bank lending rate also affects the risk taking behavior of the bank. Similarly macroeconomic variables like GDP and inflation are equally important variables on bank risk taking. In case of Nepal interest rate is the most important factor for evaluation of market risk as other factors are not popular.
Based on the findings and conclusion the study recommends that the regulatory authority should give importance in size of the banks. Similarly focus of banks should be on credit policies and guidelines, bank internal factors and formulation of appropriate rules and regulations to minimize the credit risk, operational risk and liquidity risk respectively.
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Factors affecting risk taking behavior in Nepalese commercial banks [printed text] / Subodh Adhikari, Author . - [s.d.] . - 87p. ; GRP/Thesis + 2/B. Including bibliography Languages : English | Descriptors: | Banks
Commercial banks
Nepal
Risk taking behavior
| | Keywords: | 'risk behavior banks commercial banks Nepal' | | Class number: | 332.16 | | Abstract: | Liquidity risk, credit risk, market risk, operational risk, interest rate risk etc have always been along with banks. But, since bearing risk is an integral part of banking business, it is not surprising that banks have been practicing risk management ever since there have been banks- the industry could not have survived without it. The only real change is the degree of sophistication now required to reflect the more complex and fast-paced environment. Thus, it is essential to identify the factors that affect risk taking of banks, so that risk management technique could be used more efficiently and effectively. This study attempts to identify the factors that affect the risk taking behavior of the commercial banks operating in Nepal.
This study determines the factors affecting the risk taking behavior of selected commercial banks of Nepal. The specific objectives of this study were to analyze the relationship between credit risk and capital requirement, foreign investment, ex-NRB officers, loan growth rate, non performing loan, return on assets and log of total assets, to investigate the relationship between liquidity risk and capital requirement, foreign investment, ex- NRB officers, log of total assets, credit to deposit ratio, cash reserve ratio and bank lending rate, to examine the impact of capital requirement, foreign investment, ex-NRB officers, log of total assets, GDP, Inflation and net interest margin on market risk of the bank, to assess the employees views on bank risk taking behavior.
The research was based on both the primary and secondary data with methods such as descriptive statistics and regression analysis for secondary data analysis and percentage frequency distribution and likert scale for primary data analysis.
This study concludes that the presence of foreign investors and Ex-NRB officers seems to be affecting the level of risk taken by banks. It is also concluded that regulatory capital requirement also plays important role in determining the risk taken by banks. Besides, the study also concludes that nonperforming loan and return on assets explain the credit risk of the bank. This means the banks should focus these variables in order to maintain the credit risk of the bank. Similarly, capital requirement and credit to deposit ratio explain the liquidity risk of the bank. Likewise capital requirement, ex-off, bank size and inflation explain the market risk of the bank. Similarly in the case of primary study, the study concludes that rules and regulations formulated by central bank determine the level of risk taken by the bank. The rules and regulation regarding minimum cash reserve requirement, bank lending rate also affects the risk taking behavior of the bank. Similarly macroeconomic variables like GDP and inflation are equally important variables on bank risk taking. In case of Nepal interest rate is the most important factor for evaluation of market risk as other factors are not popular.
Based on the findings and conclusion the study recommends that the regulatory authority should give importance in size of the banks. Similarly focus of banks should be on credit policies and guidelines, bank internal factors and formulation of appropriate rules and regulations to minimize the credit risk, operational risk and liquidity risk respectively.
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