| Title : | Determinants of banks performance: a case of Nepalese commercial banks | | Material Type: | printed text | | Authors: | Amrit Khanal, Author | | Publication Date: | 2017 | | Pagination: | 89p. | | Size: | GRP/Thesis | | Accompanying material: | 5/B | | Languages : | English | | Descriptors: | Bank management
| | Class number: | 332.1068 | | Abstract: | Financial performance of a firm can be analyzed in terms of profitability, dividend growth, sales turnover, asset base, capital employed among others. However, there is still debate among several disciplines regarding how the performance of firms should be measured and the factors that affect financial performance (Panagiotis & Skandalis, 2010). Different studies confirmed that performance of the commercial banks can be affected by internal and external factors. Internal factors are basically influenced by the internal decisions of management and board. The external factors are sector wide of country wide factors which are beyond the control of the company and affect the profitability of banks (Aburime, 2005). Most studies conducted in relation to bank performances focused on sector-specific factors that affect the overall banking sector Nevertheless, there is need to include the macroeconomic variables. Thus, this study has incorporated key macroeconomic variables in the analysis. Akhigbe & Mcnulty (2005) found a statistically significant difference in the average profitability, the small banks with the lowest profitability and the largest with the highest profitability.
The major purpose of the study is to determine the factors affecting the performance of the selected commercial banks in Nepal. The specific objectives of the study are as follows: i) to determine the structure and pattern of capital adequacy ratio, assets quality, management efficiency and liquidity management non-performing loan, leverage ratio, loan loss provision and credit interest to financial performance. ii) to find out the relation of capital adequacy, assets quality, liquidity management, management efficiency with financial performance of Nepalese commercial banks. iii) to investigate the impact of capital adequacy ratio, assets quality, management efficiency and liquidity management on financial performance of Nepalese commercial banks. iv) to identify the most important variable affecting financial performance of Nepalese commercial banks.
This study is based on the secondary data that have been collected from Banking and Financial Statistics and Bank Supervision Report published by Nepal Rastra Bank and Annual Reports of the selected 15 commercial banks from fiscal year 2009 to fiscal year 2015 leading to a total of 105 observations.
The average return on assets is largest for LBL (3.077 percent) and lowest for MBL (0.557 percent. The average return on equity is largest for NABIL (44.019 percent) and lowest for MBL (7.240 percent). The average net interest income is highest for ADBL (5.846 percent) and lowest for NSBL (2.347 percent). The average capital adequacy is largest for ADBL (13.841 percent) and lowest for NSBL (5.297 percent). The average Assets Quality is largest for ADBL (7.811 percent) and lowest for EBL (0.514 percent). The average size of the firm is largest for ADBL (Rs.45351.97 million) and lowest for LBL (Rs.7591.13 million). The average liquidity management is large ADBL (110.45 percentage) and lowest for SCBL (48.552 percentage).
The study revealed that return on equity has negative correlation with capital adequacy, liquidity management and assets quality. It means that higher the capital adequacy, liquidity management and assets quality lower would be the return on equity. The result shows that return on assets has size and assets quality are positively correlated which means higher the bank size and assets quality higher would be the return on assets.
The results showed that net interest margin shows positive correlation with capital adequacy, liquidity management, GDP, inflation, size and assets quality. It means that higher capital adequacy, liquidity management, GDP, inflation, size and assets quality, higher would be the net interest margin. The regression results showed that return on Assets is comparatively high in Nabil Bank Limited and Nepal Investment Bank Limited and return on equity is high in Nabil Bank Limited Similarly Net Interest Margin is high in Agriculture Development Bank Limited.
The regression results showed that Net Interest Margin shows positive correlation with capital adequacy, liquidity management, GDP, inflation, size and assets quality where only capital adequacy, assets quality, size and liquidity management are statistically significant.The regression results showed that return on assets has size and assets quality are positively correlated whereas capital adequacy is negatively correlated with ROA and Size and capital adequacy are statistically insignificant.
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Determinants of banks performance: a case of Nepalese commercial banks [printed text] / Amrit Khanal, Author . - 2017 . - 89p. ; GRP/Thesis + 5/B. Languages : English | Descriptors: | Bank management
| | Class number: | 332.1068 | | Abstract: | Financial performance of a firm can be analyzed in terms of profitability, dividend growth, sales turnover, asset base, capital employed among others. However, there is still debate among several disciplines regarding how the performance of firms should be measured and the factors that affect financial performance (Panagiotis & Skandalis, 2010). Different studies confirmed that performance of the commercial banks can be affected by internal and external factors. Internal factors are basically influenced by the internal decisions of management and board. The external factors are sector wide of country wide factors which are beyond the control of the company and affect the profitability of banks (Aburime, 2005). Most studies conducted in relation to bank performances focused on sector-specific factors that affect the overall banking sector Nevertheless, there is need to include the macroeconomic variables. Thus, this study has incorporated key macroeconomic variables in the analysis. Akhigbe & Mcnulty (2005) found a statistically significant difference in the average profitability, the small banks with the lowest profitability and the largest with the highest profitability.
The major purpose of the study is to determine the factors affecting the performance of the selected commercial banks in Nepal. The specific objectives of the study are as follows: i) to determine the structure and pattern of capital adequacy ratio, assets quality, management efficiency and liquidity management non-performing loan, leverage ratio, loan loss provision and credit interest to financial performance. ii) to find out the relation of capital adequacy, assets quality, liquidity management, management efficiency with financial performance of Nepalese commercial banks. iii) to investigate the impact of capital adequacy ratio, assets quality, management efficiency and liquidity management on financial performance of Nepalese commercial banks. iv) to identify the most important variable affecting financial performance of Nepalese commercial banks.
This study is based on the secondary data that have been collected from Banking and Financial Statistics and Bank Supervision Report published by Nepal Rastra Bank and Annual Reports of the selected 15 commercial banks from fiscal year 2009 to fiscal year 2015 leading to a total of 105 observations.
The average return on assets is largest for LBL (3.077 percent) and lowest for MBL (0.557 percent. The average return on equity is largest for NABIL (44.019 percent) and lowest for MBL (7.240 percent). The average net interest income is highest for ADBL (5.846 percent) and lowest for NSBL (2.347 percent). The average capital adequacy is largest for ADBL (13.841 percent) and lowest for NSBL (5.297 percent). The average Assets Quality is largest for ADBL (7.811 percent) and lowest for EBL (0.514 percent). The average size of the firm is largest for ADBL (Rs.45351.97 million) and lowest for LBL (Rs.7591.13 million). The average liquidity management is large ADBL (110.45 percentage) and lowest for SCBL (48.552 percentage).
The study revealed that return on equity has negative correlation with capital adequacy, liquidity management and assets quality. It means that higher the capital adequacy, liquidity management and assets quality lower would be the return on equity. The result shows that return on assets has size and assets quality are positively correlated which means higher the bank size and assets quality higher would be the return on assets.
The results showed that net interest margin shows positive correlation with capital adequacy, liquidity management, GDP, inflation, size and assets quality. It means that higher capital adequacy, liquidity management, GDP, inflation, size and assets quality, higher would be the net interest margin. The regression results showed that return on Assets is comparatively high in Nabil Bank Limited and Nepal Investment Bank Limited and return on equity is high in Nabil Bank Limited Similarly Net Interest Margin is high in Agriculture Development Bank Limited.
The regression results showed that Net Interest Margin shows positive correlation with capital adequacy, liquidity management, GDP, inflation, size and assets quality where only capital adequacy, assets quality, size and liquidity management are statistically significant.The regression results showed that return on assets has size and assets quality are positively correlated whereas capital adequacy is negatively correlated with ROA and Size and capital adequacy are statistically insignificant.
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