| Title : | Effect of assets quality on the profitability of Nepalese commercial banks | | Material Type: | printed text | | Authors: | Pravek Joshi, Author | | Publication Date: | 2017 | | Pagination: | 99p. | | Size: | GRP/Thesis | | Accompanying material: | 8/B | | Languages : | English | | Descriptors: | Bank and banking
Bank profits
| | Class number: | 332.1 | | Abstract: | Commercial banks play an important role for economic development and foster economic growth by providing number of financial services. One of the important functions of the commercial banks is the financial intermediation functions and thus it transfers the fund from surplus units to the deficit units. It accepts deposits and provides loan and advances to the needed people, institutions and investors. Asset quality is known as the loan quality and has been defined as the overall risk attached to the various assets held by an individual or institution. It is most commonly used by banks to determine how many of their assets are at financial risk and how much allowance for potential losses they must make. The most common assets requiring a strict determination of asset quality are loans, which can be non-performing assets if borrowers default on repayment obligations. Risk managers often assess the quality of assets by assigning a numerical ranking to each asset depending upon how much risk is involved (Ombaba, 2013).
The main objectives of the study are to figure out the effect of non-performing assets on the profitability of Nepalese commercial banks.This study is based on the commercial banks of Nepal. For the study purpose out of 29 commercial banks in Nepal 19 commercial banks has been selected. Data are collected for the time period of 2007/08 to 2014/15 leading to a total of 152 observations. 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 banks. 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 the relationship between assets quality and profitability of Nepalese commercial banks.
The result shows that NBBL has highest average ROA, and EBL has the highest average EPS among the selected commercial banks throughout the study period.Similarly, the average NPA is highest for NBB (10.54 percent), average bank size is highest for RBBL, average capital adequacy ratio is highest for NMB (18.36 percent), average interest rate spread is highest for NBL (6.94percent) and average bank operating is highest for NSBI (10.17 percent).
The descriptive statistics for the Nepalese commercial banks reveals that the average return on assets, return on equity, non-performing assets,bank size, capital adequacy ratio, spread rate, bank operating expenses inflation rate and GDP is 1.92 percent, 39.02rupees, 3.33percent, 10.51 billion rupees times, 10.01 percent, 4.54 percent, 3.64 percent, 8.94 percent and is 4.58 percent respectively.
The study found that non-performing assets, bank operating expenses, and inflation have negative relationship with return on assets. The results also show that capital adequacy ratio, bank size, spread rate and GDP is positively related to the return on assets. On the other hand, results also show that NPA, capital adequacy ratio, bank operating expenses and inflation is negatively related with earnings per share. However, the results show that bank size, spread rate and GDP have positive relationship with earnings per share.
The regression results show that NPA and BOE have negative and significant impact on return on assets. However, results show that CAR and spread rate have positive and significant impact on ROA of Nepalese commercial banks. Likewise, results show that beta coefficients are positive and significant for bank size and spread rate on EPS for Nepalese commercial banks. The regression results show bank operating expenses have negative and significant impact on EPS of Nepalese commercial banks. The result reveals that non-performing assets, spread rate and bank operating expenses are major determining variables in terms of ROA. The result reveals that dividend bank size, spread rate and bank operating expenses are major determining variables in terms of EPS.
|
Effect of assets quality on the profitability of Nepalese commercial banks [printed text] / Pravek Joshi, Author . - 2017 . - 99p. ; GRP/Thesis + 8/B. Languages : English | Descriptors: | Bank and banking
Bank profits
| | Class number: | 332.1 | | Abstract: | Commercial banks play an important role for economic development and foster economic growth by providing number of financial services. One of the important functions of the commercial banks is the financial intermediation functions and thus it transfers the fund from surplus units to the deficit units. It accepts deposits and provides loan and advances to the needed people, institutions and investors. Asset quality is known as the loan quality and has been defined as the overall risk attached to the various assets held by an individual or institution. It is most commonly used by banks to determine how many of their assets are at financial risk and how much allowance for potential losses they must make. The most common assets requiring a strict determination of asset quality are loans, which can be non-performing assets if borrowers default on repayment obligations. Risk managers often assess the quality of assets by assigning a numerical ranking to each asset depending upon how much risk is involved (Ombaba, 2013).
The main objectives of the study are to figure out the effect of non-performing assets on the profitability of Nepalese commercial banks.This study is based on the commercial banks of Nepal. For the study purpose out of 29 commercial banks in Nepal 19 commercial banks has been selected. Data are collected for the time period of 2007/08 to 2014/15 leading to a total of 152 observations. 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 banks. 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 the relationship between assets quality and profitability of Nepalese commercial banks.
The result shows that NBBL has highest average ROA, and EBL has the highest average EPS among the selected commercial banks throughout the study period.Similarly, the average NPA is highest for NBB (10.54 percent), average bank size is highest for RBBL, average capital adequacy ratio is highest for NMB (18.36 percent), average interest rate spread is highest for NBL (6.94percent) and average bank operating is highest for NSBI (10.17 percent).
The descriptive statistics for the Nepalese commercial banks reveals that the average return on assets, return on equity, non-performing assets,bank size, capital adequacy ratio, spread rate, bank operating expenses inflation rate and GDP is 1.92 percent, 39.02rupees, 3.33percent, 10.51 billion rupees times, 10.01 percent, 4.54 percent, 3.64 percent, 8.94 percent and is 4.58 percent respectively.
The study found that non-performing assets, bank operating expenses, and inflation have negative relationship with return on assets. The results also show that capital adequacy ratio, bank size, spread rate and GDP is positively related to the return on assets. On the other hand, results also show that NPA, capital adequacy ratio, bank operating expenses and inflation is negatively related with earnings per share. However, the results show that bank size, spread rate and GDP have positive relationship with earnings per share.
The regression results show that NPA and BOE have negative and significant impact on return on assets. However, results show that CAR and spread rate have positive and significant impact on ROA of Nepalese commercial banks. Likewise, results show that beta coefficients are positive and significant for bank size and spread rate on EPS for Nepalese commercial banks. The regression results show bank operating expenses have negative and significant impact on EPS of Nepalese commercial banks. The result reveals that non-performing assets, spread rate and bank operating expenses are major determining variables in terms of ROA. The result reveals that dividend bank size, spread rate and bank operating expenses are major determining variables in terms of EPS.
|
|
Refine your search Apply to external sourcesEffect of assets quality on the profitability of Nepalese commercial banks / Pravek Joshi
