| Title : | Factors affecting bank credit in Nepalese commercial banks | | Material Type: | printed text | | Authors: | Sandeep Kumar Shrestha, Author | | Publication Date: | 2017 | | Pagination: | 93p. | | Size: | GRP/Thesis | | Accompanying material: | 11/B | | Languages : | English | | Descriptors: | Bank loans
| | Class number: | 332.175 | | Abstract: | Bank credit which may be on short, medium or long-term basis is one of the main services that bank provides to their customers. Bank credit plays one of the most important functions in assessing credit to different sectors of the economy. As a financial intermediary, bank accepts deposits from the public and creates credit. Lending activities of various commercial banks depends on the willingness to extend credit to different sectors of the economy. Thus, lending activities of bank help to achieve economic growth. Nwankwo (2000) stated that credit is the largest single income-earning asset in the portfolio of most commercial banks. The success of credit activities to a great extent lies on the part of the credit analysis to carry out good credit analysis, presentation, structuring and reporting.
The study attempts to examine the factors affecting bank credit in Nepalese commercial banks. The study is based on secondary data of 15 commercial banks with 135 observations for the period of 2007/08 to 2015/16. Data and information have been collected from banking and financial statistics and bank supervision published by NRB and annual report of selected commercial banks. The research design adopted in this study is descriptive and causal comparative research design as it deals with the factors affecting bank credit in Nepalese commercial banks.
The result shows that average loans and advances is highest for HBL (Rs. 52,378.67 million) and lowest for NCC (Rs. 17,621.50 million). The average toal loans to total assets is highest for HBL (0.88 times) and lowest for SCB (0.44 times). The average assets size is highest for NIBL (Rs. 74,084.08 million) and lowest for NCC (Rs. 19,877.03 million). The average total deposit to total assets ratio is highest for SRBL (0.90 times) and lowest for HBL (Rs. 0.64 times). The average total capital to total assets ratio is highest for NBBL (0.21 times) and lowest for MBL (0.88 times). The average of average interest rate on loan is highest for SRBL (10.85 percent) and lowest for SCB (6.69 percent). The average of cash reserve ratio is highest for SRBl (27.77 percent) and lowest for HBL (6.95 percent).
The descriptive statistics for selected commercial banks shows that the average loans and advances, total loans to total assets, total deposit to total assets ratio, total capital to total assets ratio, assets size, average interest rate on loan, cash reserve ratio, economic growth and inflation are Rs. 9.97 million, -0.45 times, -0.18 times, -2.33 times, Rs. 10.42 million, 2.22 percent, 2.37 percent, 1.26 percent and 2.27 percent.
The correlation matrix shows that total deposit to total assets ratio, total capital to total assets ratio and assets size are positively correlated to loans and advances. However, average interest rate on loan, cash reserve ratio, economic growth and inflation are negatively correlated to loans and advances. The result also states that total deposit to total assets ratio, total capital to total assets ratio, assets size and average interest rate on loan are positively correlated to total loans to total assets. However, cash reserve ratio, economic growth and inflation are negatively correlated to total loans to total assets.
The regression analysis reveals that assets size, total deposit to total assets ratio and total capital to total assets ratio have positive impact on loans and advances. This indicates that higher the assets size, total deposit to total assets ratio and total capital to total assets ratio, higher would be the loans and advances. However, economic growth, inflation, average interest rate on loan and cash reserve ratio have negative impact on loans and advances. This indicates that higher the economic growth, inflation, average interest rate on loan and cash reserve ratio, lower would be the loans and advances.
The study also shows that assets size, total deposit to total assets ratio, total capital to total assets ratio and average interest rate on loan have positive impact on total loans to total assets. This indicates that higher the assets size, total deposit to total assets ratio, total capital to total assets ratio and average interest rate on loan, lower would be the total loans to total assets. However, economic growth, inflation and cash reserve ratio have negative impact on total loans to total assets. This study reveals that assets size, total deposit to total assets ratio, average interest rate on loan, total capital to total assets ratio and cash reserve ratio are the major factors affecting bank credit in Nepalese commercial bank.
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Factors affecting bank credit in Nepalese commercial banks [printed text] / Sandeep Kumar Shrestha, Author . - 2017 . - 93p. ; GRP/Thesis + 11/B. Languages : English | Descriptors: | Bank loans
| | Class number: | 332.175 | | Abstract: | Bank credit which may be on short, medium or long-term basis is one of the main services that bank provides to their customers. Bank credit plays one of the most important functions in assessing credit to different sectors of the economy. As a financial intermediary, bank accepts deposits from the public and creates credit. Lending activities of various commercial banks depends on the willingness to extend credit to different sectors of the economy. Thus, lending activities of bank help to achieve economic growth. Nwankwo (2000) stated that credit is the largest single income-earning asset in the portfolio of most commercial banks. The success of credit activities to a great extent lies on the part of the credit analysis to carry out good credit analysis, presentation, structuring and reporting.
The study attempts to examine the factors affecting bank credit in Nepalese commercial banks. The study is based on secondary data of 15 commercial banks with 135 observations for the period of 2007/08 to 2015/16. Data and information have been collected from banking and financial statistics and bank supervision published by NRB and annual report of selected commercial banks. The research design adopted in this study is descriptive and causal comparative research design as it deals with the factors affecting bank credit in Nepalese commercial banks.
The result shows that average loans and advances is highest for HBL (Rs. 52,378.67 million) and lowest for NCC (Rs. 17,621.50 million). The average toal loans to total assets is highest for HBL (0.88 times) and lowest for SCB (0.44 times). The average assets size is highest for NIBL (Rs. 74,084.08 million) and lowest for NCC (Rs. 19,877.03 million). The average total deposit to total assets ratio is highest for SRBL (0.90 times) and lowest for HBL (Rs. 0.64 times). The average total capital to total assets ratio is highest for NBBL (0.21 times) and lowest for MBL (0.88 times). The average of average interest rate on loan is highest for SRBL (10.85 percent) and lowest for SCB (6.69 percent). The average of cash reserve ratio is highest for SRBl (27.77 percent) and lowest for HBL (6.95 percent).
The descriptive statistics for selected commercial banks shows that the average loans and advances, total loans to total assets, total deposit to total assets ratio, total capital to total assets ratio, assets size, average interest rate on loan, cash reserve ratio, economic growth and inflation are Rs. 9.97 million, -0.45 times, -0.18 times, -2.33 times, Rs. 10.42 million, 2.22 percent, 2.37 percent, 1.26 percent and 2.27 percent.
The correlation matrix shows that total deposit to total assets ratio, total capital to total assets ratio and assets size are positively correlated to loans and advances. However, average interest rate on loan, cash reserve ratio, economic growth and inflation are negatively correlated to loans and advances. The result also states that total deposit to total assets ratio, total capital to total assets ratio, assets size and average interest rate on loan are positively correlated to total loans to total assets. However, cash reserve ratio, economic growth and inflation are negatively correlated to total loans to total assets.
The regression analysis reveals that assets size, total deposit to total assets ratio and total capital to total assets ratio have positive impact on loans and advances. This indicates that higher the assets size, total deposit to total assets ratio and total capital to total assets ratio, higher would be the loans and advances. However, economic growth, inflation, average interest rate on loan and cash reserve ratio have negative impact on loans and advances. This indicates that higher the economic growth, inflation, average interest rate on loan and cash reserve ratio, lower would be the loans and advances.
The study also shows that assets size, total deposit to total assets ratio, total capital to total assets ratio and average interest rate on loan have positive impact on total loans to total assets. This indicates that higher the assets size, total deposit to total assets ratio, total capital to total assets ratio and average interest rate on loan, lower would be the total loans to total assets. However, economic growth, inflation and cash reserve ratio have negative impact on total loans to total assets. This study reveals that assets size, total deposit to total assets ratio, average interest rate on loan, total capital to total assets ratio and cash reserve ratio are the major factors affecting bank credit in Nepalese commercial bank.
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