| Title : | Impact of bank specific and macroeconomic factors on the liquidity of Nepalese commercial banks: a comparative study of public banks, joint venture banks and private banks | | Material Type: | printed text | | Authors: | Suraksha Baskota, Author | | Publication Date: | 2017 | | Pagination: | 110p. | | Size: | GRP/Thesis | | Accompanying material: | 8/B | | Languages : | English | | Descriptors: | Macroeconomics
| | Class number: | 332.632 | | Abstract: | An asset is generally described as liquid if it can be easily and quickly sold at a minimal cost and price impact (Allen and Bolton, 2004). Liquidity management is a concept that has been receiving serious attention all over the world especially with the current financial situations and the state of the world economy. Liquidity is an ability of the bank to pay its short-term obligation to its depositor and creditors (Eljelly, 2004).Nwaezeaku (2006) argued that liquidity in banking measures the availability of cash and the rate at which current assets are converted into cash to meet ordinary and extraordinary request.Liquidity shortage can cause great damage to a banks operation (Ogbuabor and Malaolu, 2013). When crises are likely to arrive, banks seem less willing to lend and hold more liquidity due to the low level of liquidity in the market for external finance (Acharya and Naqvi, 2012). Stakeholders have interest in the liquidity position of a bank. Banking firm should ensure that it does not suffer from lack of or excess liquidity to cover up its short term obligation (Kurawa and Abubakar, 2014). Kumar and Yadav (2013) described liquidity as a bank capacity to increase fund in assets and meet both expected and unexpected cash and collateral obligation at reasonable cost and without incurring unacceptable losses.
There are differences in public sector bank, joint venture banks and domestic private banks in terms of liquidity, non-performing loan, return on assets, capital adequacy ratio, bank size, gross domestic product, inflation and treasury bill rate.Chagwiza (2014) supported that there is a positive link between bank liquidity and capital adequacy, total assets, gross domestic productwhereas liquidity is negatively correlated with inflation.Singh and Sharma (2016) revels thatbank size and GDP were found to have a negative effect on bank liquidity.Baral (2005) argued that high level of liquidity is deteriorating profitability.
The major objective of the study is to assess impact of bank specific factor and macroeconomic factor onthe liquidity of 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 bank. 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 assess impact of bank specific factor and macroeconomic factor on Nepalese commercial bank liquidity.
The result shows that NBL has highest liquid assets to total assets (0.36 times) and NBBL has highest liquid assets to total deposit (0.40 times).Similarly, RBB has highest non-performing loan (7.05 percent), JBL has highest capital adequacy ratio (28.15 percent), NBBL has highest return on assets (3.02 percent) and RBB has highest bank size (114.59 billion).
The descriptive statistics for the public banks revels that the liquid assets to total assets, liquid assets to total deposit , non-performing loan , return on assets, capital adequacy ratio, bank size, gross domestic product, inflation and treasury bill rate is 0.27 times, 0.33 times, 6.05 percent, 1.91 percent, 2.57 percent, 84.91 billion, 4.08 percent, 8.93 percent and 3.19 percentrespectively.Likewise,the descriptive statistics for the joint venture banks revels that the liquid assets to total assets, liquid assets to total deposit, non-performing loan, return on assets, capital adequacy ratio, bank size, gross domestic product, inflation and treasury bill rate is 0.27 times, 0.31 times, 1.96 percent, 2.15 percent, 11.84 percent, 54.18 billion, 4.08 percent, 8.93 percent and 3.19 percent respectively. Similarly, the descriptive statistics for the private banks revels that the liquid assets to total assets, liquid assets to total deposit, non-performing loan, return on assets, capital adequacy ratio, bank size, gross domestic product, inflation and treasury bill rate is 0.26 times, 0.30 times, 1.57 percent, 1.38 percent, 14.40 percent, 29.98 billion, 4.08 percent, 8.93 percent and 3.19 percent respectively.
In case of public banks, the study concludes that non-performing loan, return on assets, bank size, inflation and treasury bill rate has negative relation with liquid assets to total assets. Similarly, capital adequacy ratio and gross domestic product has positive relation with liquid assets to total assets.On other hand the study shows that non-performing loan, return on assets, inflation and treasury bill rate has negative relation with liquid assets to total deposit. Similarly, capital adequacy ratio bank size, and gross domestic product has positive relation with liquid assets to total deposit.In case of joint venture banks, the study finds that non-performing loan, return on assets, bank size,and treasury bill rate has negative relation with liquid assets to total assets. Similarly, capital adequacy ratio and gross domestic product has positive relation with liquid assets to total assets. On other hand the study shows that non-performing loan, return on assets, bank size, inflation and treasury bill rate has negative relation with liquid assets to total deposit. Similarly, capital adequacy ratio and gross domestic product has positive relation with liquid assets to total deposit.The result showsthat non-performing loan, return on assets, bank size, gross domestic product and treasury bill rate has negative relation with liquid assets to total assets of private banks. Similarly, capital adequacy ratio and inflation has positive relation with liquid assets to total assets of private banks. On other hand the study finds that non-performing loan, return on assets, bank size, gross domestic product and treasury bill rate has negative relation with liquid assets to total deposit of private banks. Similarly, capital adequacy ratio and inflation has positive relation with liquid assets to total deposit of private banks.
The regression result shows that non-performing loan, return on assets, bank size, inflation and treasury bill rate have negative and significant impact on liquid assets to total assets in case of public banks. Similarly, capital adequacy ratio and gross domestic product has positive impact on liquid assets to total assets in case of public banks. On other hand the study finds that non-performing loan, return on assets, inflation and treasury bill rate has negative beta coefficient with liquid assets to total deposit in case of public banks. Similarly, capital adequacy ratio bank size, and gross domestic product has positive and significant impact on liquid assets to total deposit in case of public banks.Likewise, the study finds that non-performing loan, return on assets, bank size, and treasury bill rate has negative impact on liquid assets to total assets in case of joint venture banks. Similarly, capital adequacy ratio, gross domestic product and inflation has positive beta coefficient with liquid assets to total assets in case of joint venture banks. On other hand the study finds that non-performing loan, return on assets, bank size, inflation and treasury bill rate has negative and significant impact on liquid assets to total deposit. Similarly, capital adequacy ratio and gross domestic product has positive beta coefficient on liquid assets to total deposit in case of joint venture banks.The result showsthat non-performing loan, return on assets, bank size, gross domestic product and treasury bill rate has negative impact on liquid assets to total assets of private banks. Similarly, capital adequacy ratio and inflation has positive impact on liquid assets to total assets of private banks. On other hand the study finds that non-performing loan, return on assets, bank size, gross domestic product and treasury bill rate has negative impact on liquid assets to total deposit of private banks. Similarly, capital adequacy ratio and inflation has positive and significant impact with liquid assets to total deposit of private banks.
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Impact of bank specific and macroeconomic factors on the liquidity of Nepalese commercial banks: a comparative study of public banks, joint venture banks and private banks [printed text] / Suraksha Baskota, Author . - 2017 . - 110p. ; GRP/Thesis + 8/B. Languages : English | Descriptors: | Macroeconomics
| | Class number: | 332.632 | | Abstract: | An asset is generally described as liquid if it can be easily and quickly sold at a minimal cost and price impact (Allen and Bolton, 2004). Liquidity management is a concept that has been receiving serious attention all over the world especially with the current financial situations and the state of the world economy. Liquidity is an ability of the bank to pay its short-term obligation to its depositor and creditors (Eljelly, 2004).Nwaezeaku (2006) argued that liquidity in banking measures the availability of cash and the rate at which current assets are converted into cash to meet ordinary and extraordinary request.Liquidity shortage can cause great damage to a banks operation (Ogbuabor and Malaolu, 2013). When crises are likely to arrive, banks seem less willing to lend and hold more liquidity due to the low level of liquidity in the market for external finance (Acharya and Naqvi, 2012). Stakeholders have interest in the liquidity position of a bank. Banking firm should ensure that it does not suffer from lack of or excess liquidity to cover up its short term obligation (Kurawa and Abubakar, 2014). Kumar and Yadav (2013) described liquidity as a bank capacity to increase fund in assets and meet both expected and unexpected cash and collateral obligation at reasonable cost and without incurring unacceptable losses.
There are differences in public sector bank, joint venture banks and domestic private banks in terms of liquidity, non-performing loan, return on assets, capital adequacy ratio, bank size, gross domestic product, inflation and treasury bill rate.Chagwiza (2014) supported that there is a positive link between bank liquidity and capital adequacy, total assets, gross domestic productwhereas liquidity is negatively correlated with inflation.Singh and Sharma (2016) revels thatbank size and GDP were found to have a negative effect on bank liquidity.Baral (2005) argued that high level of liquidity is deteriorating profitability.
The major objective of the study is to assess impact of bank specific factor and macroeconomic factor onthe liquidity of 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 bank. 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 assess impact of bank specific factor and macroeconomic factor on Nepalese commercial bank liquidity.
The result shows that NBL has highest liquid assets to total assets (0.36 times) and NBBL has highest liquid assets to total deposit (0.40 times).Similarly, RBB has highest non-performing loan (7.05 percent), JBL has highest capital adequacy ratio (28.15 percent), NBBL has highest return on assets (3.02 percent) and RBB has highest bank size (114.59 billion).
The descriptive statistics for the public banks revels that the liquid assets to total assets, liquid assets to total deposit , non-performing loan , return on assets, capital adequacy ratio, bank size, gross domestic product, inflation and treasury bill rate is 0.27 times, 0.33 times, 6.05 percent, 1.91 percent, 2.57 percent, 84.91 billion, 4.08 percent, 8.93 percent and 3.19 percentrespectively.Likewise,the descriptive statistics for the joint venture banks revels that the liquid assets to total assets, liquid assets to total deposit, non-performing loan, return on assets, capital adequacy ratio, bank size, gross domestic product, inflation and treasury bill rate is 0.27 times, 0.31 times, 1.96 percent, 2.15 percent, 11.84 percent, 54.18 billion, 4.08 percent, 8.93 percent and 3.19 percent respectively. Similarly, the descriptive statistics for the private banks revels that the liquid assets to total assets, liquid assets to total deposit, non-performing loan, return on assets, capital adequacy ratio, bank size, gross domestic product, inflation and treasury bill rate is 0.26 times, 0.30 times, 1.57 percent, 1.38 percent, 14.40 percent, 29.98 billion, 4.08 percent, 8.93 percent and 3.19 percent respectively.
In case of public banks, the study concludes that non-performing loan, return on assets, bank size, inflation and treasury bill rate has negative relation with liquid assets to total assets. Similarly, capital adequacy ratio and gross domestic product has positive relation with liquid assets to total assets.On other hand the study shows that non-performing loan, return on assets, inflation and treasury bill rate has negative relation with liquid assets to total deposit. Similarly, capital adequacy ratio bank size, and gross domestic product has positive relation with liquid assets to total deposit.In case of joint venture banks, the study finds that non-performing loan, return on assets, bank size,and treasury bill rate has negative relation with liquid assets to total assets. Similarly, capital adequacy ratio and gross domestic product has positive relation with liquid assets to total assets. On other hand the study shows that non-performing loan, return on assets, bank size, inflation and treasury bill rate has negative relation with liquid assets to total deposit. Similarly, capital adequacy ratio and gross domestic product has positive relation with liquid assets to total deposit.The result showsthat non-performing loan, return on assets, bank size, gross domestic product and treasury bill rate has negative relation with liquid assets to total assets of private banks. Similarly, capital adequacy ratio and inflation has positive relation with liquid assets to total assets of private banks. On other hand the study finds that non-performing loan, return on assets, bank size, gross domestic product and treasury bill rate has negative relation with liquid assets to total deposit of private banks. Similarly, capital adequacy ratio and inflation has positive relation with liquid assets to total deposit of private banks.
The regression result shows that non-performing loan, return on assets, bank size, inflation and treasury bill rate have negative and significant impact on liquid assets to total assets in case of public banks. Similarly, capital adequacy ratio and gross domestic product has positive impact on liquid assets to total assets in case of public banks. On other hand the study finds that non-performing loan, return on assets, inflation and treasury bill rate has negative beta coefficient with liquid assets to total deposit in case of public banks. Similarly, capital adequacy ratio bank size, and gross domestic product has positive and significant impact on liquid assets to total deposit in case of public banks.Likewise, the study finds that non-performing loan, return on assets, bank size, and treasury bill rate has negative impact on liquid assets to total assets in case of joint venture banks. Similarly, capital adequacy ratio, gross domestic product and inflation has positive beta coefficient with liquid assets to total assets in case of joint venture banks. On other hand the study finds that non-performing loan, return on assets, bank size, inflation and treasury bill rate has negative and significant impact on liquid assets to total deposit. Similarly, capital adequacy ratio and gross domestic product has positive beta coefficient on liquid assets to total deposit in case of joint venture banks.The result showsthat non-performing loan, return on assets, bank size, gross domestic product and treasury bill rate has negative impact on liquid assets to total assets of private banks. Similarly, capital adequacy ratio and inflation has positive impact on liquid assets to total assets of private banks. On other hand the study finds that non-performing loan, return on assets, bank size, gross domestic product and treasury bill rate has negative impact on liquid assets to total deposit of private banks. Similarly, capital adequacy ratio and inflation has positive and significant impact with liquid assets to total deposit of private banks.
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