| Title : | Ownership structure, risk and performance in Nepalese commercial banks | | Material Type: | printed text | | Authors: | Bhim Prasad Koirala, Author | | Publication Date: | 2017 | | Pagination: | 91p. | | Size: | GRP/Thesis | | Accompanying material: | 9/B | | Languages : | English | | Descriptors: | Stock ownership
| | Class number: | 658.152 | | Abstract: | The relevance of firms’ ownership structure has been extensively explored in the theoretical literature. As far ownership concentration is concerned, Bearle and Means (1932) stated that the separation of ownership and control may create a conflict of interests between owners and managers. Moreover, Jensen and Meckling (1976) posit that the agency costs of deviation from value maximization increase as managers’ equity stake decreases and ownership becomes more dispersed. The argument may weaken if the dispersed ownership went along with the public trading of the firm’s securities.
The choice of ownership such as foreign, local, public, private, state, etc. is important in the context of non-bank firms but becomes crucial in the context of a bank (Boubakri et al., 2005). However, it is an essential element for the development of a healthy banking system in developing countries (Lang & So, 2002). Changes in ownership structure without a supporting regulatory and supervisory body in place is likely to lead to a banking crisis. The issue of ownership structure is of particular interest for the banking industry as several factors interact and alter governance, such as the quality of bank regulation and supervision and the opacity of bank assets.
The major objective of this study is to assess the relationship between ownership structure, risk and performance of Nepalese commercial banks. The study is based on the secondary data of 22 Nepalese commercial banks for the period of 2010/11 to 2014/15 with a total of 110 observations. Data and information have been collected from the World Economic Outlook of International Monetary Fund, annual reports of selected commercial banks and Banking and Financial Statistics published by Nepal Rastra Bank. This study has employed descriptive research design and causal comparative research design to deal with issues associated ownership structure, risk and performance of selected commercial banks. The relationship between dependent and independent variables are analyzed in single step and multi-step regression analysis. Return on assets, net interest margin and return on equity are the dependent variables, whereas government ownership, foreign ownership, total assets, loan to total assets, liquidity ratio and capital ratio are independent variables.
The result shows that average return on assets is highest for ADBL (2.99 percent) and lowest for MBL (0.61 percent). The average return on equity is highest for NABIL (29.29 percent) and lowest for NBL (-56.94 percent). ). The non-performing loan is highest for ADBL (6.14 percent) and lowest for SBI (0.50percent).The size is highest for NABIL (85.94 billions) and lowest for MEBL (15.63 percent). The loan to total assets ratio is highest for JBL(73.17 times) and lowest for SCBL 45.38 times). The liquidity ratio is highest for SCBL (22.51 times) and lowest for ADBL (5.86 percent).The capital ratio is highest for ADBL (18.15 times) and lowest for NBL (1.05 times). The descriptive statistics shows that the average return on assets, return on equity, non-performing loan, total assets, loan ratio, liquidity ratio, and capital adequacy ratio is1.50 percent, -11.90 percent, 2.15 percent, Rs. 42.80 billion, 65.68times, 13.49 times and 10.15 times respectively.
The study of selected commercial bank shows that government ownership, foreign ownership, size and capital to total assets ratio are positivity correlated to return on assets. However, liquidity ratio and loan ratio are negative correlated to return on assets. Similarly, foreign ownership, size, loan and capital are positively correlated to return on equity. However, government ownership and liquidity are negatively correlated to return on equity. The results show that government ownership, size, loan and capital are positively correlated to non-performing loans. However, there is negative relation of foreign ownership and liquidity with non-performing.
The regression analysis reveals that the foreign ownership of the banks has significant positive impact on the financial performance indicating higher the foreign ownership, higher would be the performance. Similarly, size and capital ratio has significant positive impact on the return on assets. This indicates that larger the bank, higher would be the return on assets and higher the capital ratio, higher would be the return on assets. The study also revealed that loan ratio has significant negative impact on return on assets. This indicates that higher the loan ratio, lower would be the return on assets. The study also reveals that capital ratio has significant negative impact with return on equity of banks indicating higher the capital ratio, lower would be the return on equity. Similarly, the study also found that government ownership has significant positive impact on non-performing loans indicating higher the government ownership, higher would be the risk.
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Ownership structure, risk and performance in Nepalese commercial banks [printed text] / Bhim Prasad Koirala, Author . - 2017 . - 91p. ; GRP/Thesis + 9/B. Languages : English | Descriptors: | Stock ownership
| | Class number: | 658.152 | | Abstract: | The relevance of firms’ ownership structure has been extensively explored in the theoretical literature. As far ownership concentration is concerned, Bearle and Means (1932) stated that the separation of ownership and control may create a conflict of interests between owners and managers. Moreover, Jensen and Meckling (1976) posit that the agency costs of deviation from value maximization increase as managers’ equity stake decreases and ownership becomes more dispersed. The argument may weaken if the dispersed ownership went along with the public trading of the firm’s securities.
The choice of ownership such as foreign, local, public, private, state, etc. is important in the context of non-bank firms but becomes crucial in the context of a bank (Boubakri et al., 2005). However, it is an essential element for the development of a healthy banking system in developing countries (Lang & So, 2002). Changes in ownership structure without a supporting regulatory and supervisory body in place is likely to lead to a banking crisis. The issue of ownership structure is of particular interest for the banking industry as several factors interact and alter governance, such as the quality of bank regulation and supervision and the opacity of bank assets.
The major objective of this study is to assess the relationship between ownership structure, risk and performance of Nepalese commercial banks. The study is based on the secondary data of 22 Nepalese commercial banks for the period of 2010/11 to 2014/15 with a total of 110 observations. Data and information have been collected from the World Economic Outlook of International Monetary Fund, annual reports of selected commercial banks and Banking and Financial Statistics published by Nepal Rastra Bank. This study has employed descriptive research design and causal comparative research design to deal with issues associated ownership structure, risk and performance of selected commercial banks. The relationship between dependent and independent variables are analyzed in single step and multi-step regression analysis. Return on assets, net interest margin and return on equity are the dependent variables, whereas government ownership, foreign ownership, total assets, loan to total assets, liquidity ratio and capital ratio are independent variables.
The result shows that average return on assets is highest for ADBL (2.99 percent) and lowest for MBL (0.61 percent). The average return on equity is highest for NABIL (29.29 percent) and lowest for NBL (-56.94 percent). ). The non-performing loan is highest for ADBL (6.14 percent) and lowest for SBI (0.50percent).The size is highest for NABIL (85.94 billions) and lowest for MEBL (15.63 percent). The loan to total assets ratio is highest for JBL(73.17 times) and lowest for SCBL 45.38 times). The liquidity ratio is highest for SCBL (22.51 times) and lowest for ADBL (5.86 percent).The capital ratio is highest for ADBL (18.15 times) and lowest for NBL (1.05 times). The descriptive statistics shows that the average return on assets, return on equity, non-performing loan, total assets, loan ratio, liquidity ratio, and capital adequacy ratio is1.50 percent, -11.90 percent, 2.15 percent, Rs. 42.80 billion, 65.68times, 13.49 times and 10.15 times respectively.
The study of selected commercial bank shows that government ownership, foreign ownership, size and capital to total assets ratio are positivity correlated to return on assets. However, liquidity ratio and loan ratio are negative correlated to return on assets. Similarly, foreign ownership, size, loan and capital are positively correlated to return on equity. However, government ownership and liquidity are negatively correlated to return on equity. The results show that government ownership, size, loan and capital are positively correlated to non-performing loans. However, there is negative relation of foreign ownership and liquidity with non-performing.
The regression analysis reveals that the foreign ownership of the banks has significant positive impact on the financial performance indicating higher the foreign ownership, higher would be the performance. Similarly, size and capital ratio has significant positive impact on the return on assets. This indicates that larger the bank, higher would be the return on assets and higher the capital ratio, higher would be the return on assets. The study also revealed that loan ratio has significant negative impact on return on assets. This indicates that higher the loan ratio, lower would be the return on assets. The study also reveals that capital ratio has significant negative impact with return on equity of banks indicating higher the capital ratio, lower would be the return on equity. Similarly, the study also found that government ownership has significant positive impact on non-performing loans indicating higher the government ownership, higher would be the risk.
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