| Title : | Market structure and performance of commercial banks in Nepal | | Material Type: | printed text | | Authors: | Manju Adhikari, Author | | Publication Date: | 2014 | | Pagination: | 110p. | | Size: | GRP/Thesis | | Accompanying material: | 1/B | | General note: | Including bibliography | | Languages : | English | | Descriptors: | Banks
Banks and banking
Commercial banks
Industrial organization (Economic theory)
Markets
Nepal
| | Keywords: | 'market structure banks bank and banking markets nepal commercial bank' | | Class number: | 338.6 | | Abstract: | Bank performance has substantive repercussion on investment, firm growth, industrial expansion, and economic development. Thus, study on the banking system, market structure and performance has important policy implications. Therefore, this study is particularly relevant for Nepalese economy given the high degree of concentration in its banking market. The importance of conducting this study is to provide empirical evidence on the market structure and performance of listed commercial banks in Nepal. Hence, the outcome of the study will help the country’s regulator in formation of policy to deal with unexpected change in financial conditions, capital adequacy regulations and other factors that might affects the bank’s performance. The main objective of this study is to examine the relationship between the market structure and financial performance of Nepalese commercial banks. The Specific objectives are to examine the impact of the market structure on profitability of Nepalese commercial banks, to study the major roles of the determinants of the performance of Nepalese commercial banks, to examine the impact of ownership on the efficiency of commercial banks in Nepal and to analysis how cost efficiency influence the performance of the commercial banking and to analyze effect of market structure in enhancing the performance of commercial banks in Nepal. This study has employed descriptive and casual comparative research designs to deal with the fundamental issues associated with the market structure and performance of commercial banks in Nepal. Moreover, this study depends on correlation research design in order to determine the direction and magnitude of the correlation among the dependent variable i.e. banks’ performance and the independent variables. So, this study employed the relationship between ROA, ROE, market value, total assets, C/D ratio, credit risk as measured by NPL/Total loan, liquidity risk measured by CRR, and Cost efficiency as measured by total revenue/total cost with the help of correlation research design. The structured questionnaire survey has been conducted to collect and record the opinions and perception of bankers regarding the determinants of banks’ performance and market structure. For secondary data analysis the essential data have collected for each year from 2001/02 to 2012/13 of selected banks. The result of this study found that among the determinants of ROA, the highest positive and significant correlation coefficient is recorded between C/D ratio and total assets. Among the determinants of ROE, the highest negative and significant correlation coefficient is recorded between credit risk and total assets. The regression result shows that only credit risk, liquidity risk and total assets positively and significantly influence return on assets. However, the models estimated are good as revealed by F-statistics and coefficients of multiple determinations (R2).Likewise, the regression result of ROE and its determinants find out that even though all the variables are positively related with ROE but only market value is significantly related with ROE. This means that only market value influence ROE.
Analysis of Primary Data revealed that the level of profit in the selected banks is moderate. The survey indicates that majority of respondents accepted that the recent changes in banking and investment regulations in Nepal affects banking activities and its expansion. The central bank regulation and policies is the major factors that make changes in Nepalese banking industry over past decades. Credit risk is the most important factors affecting the performance of the banks followed by cost efficiency, market share, total assets, C/D ratio and liquidity risk respectively. Likewise, it is found that profitability is the primary goal of commercial banks of Nepal and without profitability bank will not survive for the long run. Similarly, trend in bank profitability and factor affecting it are major indicator of changes in the state of health of national banking system and the current profitability of commercial banks of Nepal is sufficient in order to survive for the long run. Majority of the respondent feel that Banks would improve profitability by improving screening and monitoring of credit risk and such policies involve the forecasting of future levels of risk. It is also found that Bank having higher cost efficiency shows lower profitability and the profitability of commercial banks in Nepal is not good as expected due to corruption, lack of proper policy and guidelines, higher lending on non-productive sectors, and lack of good corporate governance.
The major conclusion of this study is that banks with high market value per share have higher return on assets and large size banks have high return on asset. With respect to cost efficiency, credit risk, liquidity risks, size, credit deposit ratio shows a positive pattern of movement in return on asset was observed. Further, the result shows that return on equity also increases with Liquidity risk and size on one way sort portfolio. Finally ROA is significantly influence by liquidity risk, credit risk and total assets and ROE is influenced by market value of the banks.
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Market structure and performance of commercial banks in Nepal [printed text] / Manju Adhikari, Author . - 2014 . - 110p. ; GRP/Thesis + 1/B. Including bibliography Languages : English | Descriptors: | Banks
Banks and banking
Commercial banks
Industrial organization (Economic theory)
Markets
Nepal
| | Keywords: | 'market structure banks bank and banking markets nepal commercial bank' | | Class number: | 338.6 | | Abstract: | Bank performance has substantive repercussion on investment, firm growth, industrial expansion, and economic development. Thus, study on the banking system, market structure and performance has important policy implications. Therefore, this study is particularly relevant for Nepalese economy given the high degree of concentration in its banking market. The importance of conducting this study is to provide empirical evidence on the market structure and performance of listed commercial banks in Nepal. Hence, the outcome of the study will help the country’s regulator in formation of policy to deal with unexpected change in financial conditions, capital adequacy regulations and other factors that might affects the bank’s performance. The main objective of this study is to examine the relationship between the market structure and financial performance of Nepalese commercial banks. The Specific objectives are to examine the impact of the market structure on profitability of Nepalese commercial banks, to study the major roles of the determinants of the performance of Nepalese commercial banks, to examine the impact of ownership on the efficiency of commercial banks in Nepal and to analysis how cost efficiency influence the performance of the commercial banking and to analyze effect of market structure in enhancing the performance of commercial banks in Nepal. This study has employed descriptive and casual comparative research designs to deal with the fundamental issues associated with the market structure and performance of commercial banks in Nepal. Moreover, this study depends on correlation research design in order to determine the direction and magnitude of the correlation among the dependent variable i.e. banks’ performance and the independent variables. So, this study employed the relationship between ROA, ROE, market value, total assets, C/D ratio, credit risk as measured by NPL/Total loan, liquidity risk measured by CRR, and Cost efficiency as measured by total revenue/total cost with the help of correlation research design. The structured questionnaire survey has been conducted to collect and record the opinions and perception of bankers regarding the determinants of banks’ performance and market structure. For secondary data analysis the essential data have collected for each year from 2001/02 to 2012/13 of selected banks. The result of this study found that among the determinants of ROA, the highest positive and significant correlation coefficient is recorded between C/D ratio and total assets. Among the determinants of ROE, the highest negative and significant correlation coefficient is recorded between credit risk and total assets. The regression result shows that only credit risk, liquidity risk and total assets positively and significantly influence return on assets. However, the models estimated are good as revealed by F-statistics and coefficients of multiple determinations (R2).Likewise, the regression result of ROE and its determinants find out that even though all the variables are positively related with ROE but only market value is significantly related with ROE. This means that only market value influence ROE.
Analysis of Primary Data revealed that the level of profit in the selected banks is moderate. The survey indicates that majority of respondents accepted that the recent changes in banking and investment regulations in Nepal affects banking activities and its expansion. The central bank regulation and policies is the major factors that make changes in Nepalese banking industry over past decades. Credit risk is the most important factors affecting the performance of the banks followed by cost efficiency, market share, total assets, C/D ratio and liquidity risk respectively. Likewise, it is found that profitability is the primary goal of commercial banks of Nepal and without profitability bank will not survive for the long run. Similarly, trend in bank profitability and factor affecting it are major indicator of changes in the state of health of national banking system and the current profitability of commercial banks of Nepal is sufficient in order to survive for the long run. Majority of the respondent feel that Banks would improve profitability by improving screening and monitoring of credit risk and such policies involve the forecasting of future levels of risk. It is also found that Bank having higher cost efficiency shows lower profitability and the profitability of commercial banks in Nepal is not good as expected due to corruption, lack of proper policy and guidelines, higher lending on non-productive sectors, and lack of good corporate governance.
The major conclusion of this study is that banks with high market value per share have higher return on assets and large size banks have high return on asset. With respect to cost efficiency, credit risk, liquidity risks, size, credit deposit ratio shows a positive pattern of movement in return on asset was observed. Further, the result shows that return on equity also increases with Liquidity risk and size on one way sort portfolio. Finally ROA is significantly influence by liquidity risk, credit risk and total assets and ROE is influenced by market value of the banks.
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338 Micro-économie : activités et comportements économiques des individus, consommation
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