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Refine your search Apply to external sourcesBank liquidity risk and performance : a case of Nepalese commercial banks / Rajesh Gupta
Title : Bank liquidity risk and performance : a case of Nepalese commercial banks Material Type: printed text Authors: Rajesh Gupta, Author Publication Date: 2016 Pagination: 96p. Size: GRP/Thesis Accompanying material: 7/B Languages : English Descriptors: Liquidity (Economics) Class number: 658.152 Abstract: Liquidity management is a common principle in banking management. It means ensuring that the bank possesses sufficient cash to satisfy unexpected cash outlets. Liquidity management is an important function of any business because it is the determinant of whether the entity will be in operation in the foreseeable future or not. However, more than enough liquidity is also harmful and thus invites profitability risk. An adequate liquidity position for one bank may not be sufficient for another. Lack of adequate liquidity is often one of the first signs that a bank is in serious financial trouble (Rose, 1999).
The performances of the financial institutions have proved to be an effective channel between savers and borrowers. A major adequate financial intermediation requires the purposeful attention of the bank management to profitability and liquidity, which are two conflicting goals of the commercial banks (Olagunju et al., 2011).
The study examines the relationship between the bank liquidity and its effect on the banks profitability. To analyze the structure and pattern of the variables. To find the relationship of return on assets, capital and reserve, and liquid assets to total assets with determinants of liquidity. Hence, this study attempts to analyze the liquidity risks and financial performance measures using credit to deposit ratio, cash, investment, total assets, cash reserve ratio, and capital adequacy ratio as the indicator to the Nepalese commercial banks. The study has selected 19 Nepalese commercial banks. The methods used for secondary data analysis included descriptive analysis, correlation analysis and regression analysis.
The major conclusion of this study is that total deposit, capital adequacy ratio, and cash reserve ratio have significantly positive impact on capital and reserve whereas non-performing loan to total loan have significantly negative with capital and reserve. Similarly, credit to deposit, deposit, cash reserve ratio and capital adequacy ratio have significantly positive with liquid assets to total assets. Likewise, total assets and investment have significantly positive with return on assets whereas negatively with non-performing loan to total loan.
Bank liquidity risk and performance : a case of Nepalese commercial banks [printed text] / Rajesh Gupta, Author . - 2016 . - 96p. ; GRP/Thesis + 7/B.
Languages : English
Descriptors: Liquidity (Economics) Class number: 658.152 Abstract: Liquidity management is a common principle in banking management. It means ensuring that the bank possesses sufficient cash to satisfy unexpected cash outlets. Liquidity management is an important function of any business because it is the determinant of whether the entity will be in operation in the foreseeable future or not. However, more than enough liquidity is also harmful and thus invites profitability risk. An adequate liquidity position for one bank may not be sufficient for another. Lack of adequate liquidity is often one of the first signs that a bank is in serious financial trouble (Rose, 1999).
The performances of the financial institutions have proved to be an effective channel between savers and borrowers. A major adequate financial intermediation requires the purposeful attention of the bank management to profitability and liquidity, which are two conflicting goals of the commercial banks (Olagunju et al., 2011).
The study examines the relationship between the bank liquidity and its effect on the banks profitability. To analyze the structure and pattern of the variables. To find the relationship of return on assets, capital and reserve, and liquid assets to total assets with determinants of liquidity. Hence, this study attempts to analyze the liquidity risks and financial performance measures using credit to deposit ratio, cash, investment, total assets, cash reserve ratio, and capital adequacy ratio as the indicator to the Nepalese commercial banks. The study has selected 19 Nepalese commercial banks. The methods used for secondary data analysis included descriptive analysis, correlation analysis and regression analysis.
The major conclusion of this study is that total deposit, capital adequacy ratio, and cash reserve ratio have significantly positive impact on capital and reserve whereas non-performing loan to total loan have significantly negative with capital and reserve. Similarly, credit to deposit, deposit, cash reserve ratio and capital adequacy ratio have significantly positive with liquid assets to total assets. Likewise, total assets and investment have significantly positive with return on assets whereas negatively with non-performing loan to total loan.
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Barcode Call number Media type Location Section Status 200/D 658.152 GUP Books Uniglobe Library Technology Available
Title : Capital structure choice of commercial bank around South Asia: the role of country specific determinants with special reference to Nepal Material Type: printed text Authors: Arjun Gautam, Author Publication Date: 2016 Pagination: 96p. Size: GRP/Thesis Accompanying material: 6/B Languages : English Descriptors: Capital structure Class number: 658.152 Abstract: Researchers over the last decades believe that there is a relationship between macroeconomic condition of a country and capital structure choice of the firm. There are many studies published to examine this relationship. The relationship between macroeconomic condition of a country and capital structure choice of the firm are studied extensively by several researchers. In regards to the relationship between macroeconomic condition of a country and capital structure choice of the firm, researchers found different results. Some other the scholars’ stated that macroeconomic factors have negative relationship with capital structure choice of the firm. Meanwhile other researcher indicate that the nonlinear positive relationship between macroeconomic condition of a country and capital structure choice of the firm.
This study investigates the impact of country specific variables (macroeconomic) on capital structure choice of commercial banks of south Asian countries. The study has employed descriptive and causal comparative research design to deal with the fundamental issues associated with the impact of macroeconomic condition of a country on capital structure choice of the commercial banks in context of south Asian countries. The study is based on secondary data. The variables used in the study are categorized into country specific variables (inflation, ratio of stock market capitalization to GDP, GDP growth rate, discount rate on 91 days T-bill and ratio of quasi money supply to GDP) as independent variables and capital structure as dependent variables i.e. total debt ratio, long term debt ratio and short term debt ratio. Similarly this study covers data on dependent variables and independent variables for 13 years ranging for year 2001 to 2013.
The study reveals that macro-economic variable; inflation has negative relationship with total debt ratio of commercial banks of all four sample countries except commercial banks of Sri-Lanka. It means that as the inflation rate in a country increases the debt ratio of the commercial banks becomes weaker and vice versa. Similarly, the inflation has positive relation with long term debt ratio of commercial banks of Nepal and Pakistan but has negative relation with long term debt ratio of India, Sri-Lanka and Bhutan. For positive relation it advocates that as the inflation increases the long term leverage of the banks increases and vice versa. The GDP growth rate has negative relation with total debt ratio of commercial banks of all four sample countries except that of Pakistan, which means that when the country is economically developed, people prefer making investment in the various projects carried out by government as well as private sectors rather than depositing in banks for fixed period of time thus the long term debt ratio of commercial banks also decreases. The study revealed that ratio of quasi money supply (M2) has been found to be significant factor affecting the total debt ratio and short term debt ratio of Nepalese commercial bank. On the other hand none of macroeconomic factors are found to be significant factor affecting the long term debt ratio of Nepalese commercial bank. The study advocates that ratio of stock market capitalization and ratio of quasi money supply (M2) has been found to be significant factor affecting the total debt ratio of Indian commercial bank. Similarly, inflation, 91 days T-bill interest rate and ratio of quasi money supply to GDP are found to be significant factor affecting the long term debt ratio of Indian commercial bank. Whereas, only GDP growth rate has been found to be significant factor affecting the short term debt ratio of Indian commercial bank.
The study further reveals that GDP growth rate and ratio of market capitalization to GDP has been found to be significant factor affecting the total debt ratio, long term debt ratio and short term debt ratio of Sri-Lankan commercial bank. Inflation, GDP growth 91 days T-bill interest rate and ratio of quasi money supply (M2) has been found to be significant factor affecting the total debt ratio of Pakistani commercial bank. Whereas, none of the macroeconomic factors are found to be significant factor affecting the long term debt ratio. On the other hand inflation, 91 days T-bill interest rate and ratio of quasi money supply to GDP has been found to be significant factor affecting the short term debt ratio of Pakistani commercial bank. Ratio of quasi money supply (M2) has been found to be significant factor affecting the total debt ratio of Bhutanese commercial bank. Similarly, inflation, ratio of stock market capitalization to GDP and ratio of quasi money supply to GDP are found to be significant factor affecting the long term debt ratio of Bhutanese commercial bank. Whereas, only ratio of quasi money supply to GDP has been found to be significant factor affecting the short term debt ratio of Bhutanese commercial bank.
The study remains enough ground for the future researchers in the same topic. The future studies can be done by using both primary and secondary data so that along with country specific variables, firm specific factors can be used to get more precise result. In addition to commercial banks, the future study may include other financial and non financial sector such as development bank, finance companies, hotel and service industries, manufacturing industries, micro finance, insurance companies, hydro power companies etc to make such research work more reliable and valid. The results are thus not representative of all sectors of the economy. Hence, future studies can include significant number of observations from the sectors other than banks and financial institutions.
Capital structure choice of commercial bank around South Asia: the role of country specific determinants with special reference to Nepal [printed text] / Arjun Gautam, Author . - 2016 . - 96p. ; GRP/Thesis + 6/B.
Languages : English
Descriptors: Capital structure Class number: 658.152 Abstract: Researchers over the last decades believe that there is a relationship between macroeconomic condition of a country and capital structure choice of the firm. There are many studies published to examine this relationship. The relationship between macroeconomic condition of a country and capital structure choice of the firm are studied extensively by several researchers. In regards to the relationship between macroeconomic condition of a country and capital structure choice of the firm, researchers found different results. Some other the scholars’ stated that macroeconomic factors have negative relationship with capital structure choice of the firm. Meanwhile other researcher indicate that the nonlinear positive relationship between macroeconomic condition of a country and capital structure choice of the firm.
This study investigates the impact of country specific variables (macroeconomic) on capital structure choice of commercial banks of south Asian countries. The study has employed descriptive and causal comparative research design to deal with the fundamental issues associated with the impact of macroeconomic condition of a country on capital structure choice of the commercial banks in context of south Asian countries. The study is based on secondary data. The variables used in the study are categorized into country specific variables (inflation, ratio of stock market capitalization to GDP, GDP growth rate, discount rate on 91 days T-bill and ratio of quasi money supply to GDP) as independent variables and capital structure as dependent variables i.e. total debt ratio, long term debt ratio and short term debt ratio. Similarly this study covers data on dependent variables and independent variables for 13 years ranging for year 2001 to 2013.
The study reveals that macro-economic variable; inflation has negative relationship with total debt ratio of commercial banks of all four sample countries except commercial banks of Sri-Lanka. It means that as the inflation rate in a country increases the debt ratio of the commercial banks becomes weaker and vice versa. Similarly, the inflation has positive relation with long term debt ratio of commercial banks of Nepal and Pakistan but has negative relation with long term debt ratio of India, Sri-Lanka and Bhutan. For positive relation it advocates that as the inflation increases the long term leverage of the banks increases and vice versa. The GDP growth rate has negative relation with total debt ratio of commercial banks of all four sample countries except that of Pakistan, which means that when the country is economically developed, people prefer making investment in the various projects carried out by government as well as private sectors rather than depositing in banks for fixed period of time thus the long term debt ratio of commercial banks also decreases. The study revealed that ratio of quasi money supply (M2) has been found to be significant factor affecting the total debt ratio and short term debt ratio of Nepalese commercial bank. On the other hand none of macroeconomic factors are found to be significant factor affecting the long term debt ratio of Nepalese commercial bank. The study advocates that ratio of stock market capitalization and ratio of quasi money supply (M2) has been found to be significant factor affecting the total debt ratio of Indian commercial bank. Similarly, inflation, 91 days T-bill interest rate and ratio of quasi money supply to GDP are found to be significant factor affecting the long term debt ratio of Indian commercial bank. Whereas, only GDP growth rate has been found to be significant factor affecting the short term debt ratio of Indian commercial bank.
The study further reveals that GDP growth rate and ratio of market capitalization to GDP has been found to be significant factor affecting the total debt ratio, long term debt ratio and short term debt ratio of Sri-Lankan commercial bank. Inflation, GDP growth 91 days T-bill interest rate and ratio of quasi money supply (M2) has been found to be significant factor affecting the total debt ratio of Pakistani commercial bank. Whereas, none of the macroeconomic factors are found to be significant factor affecting the long term debt ratio. On the other hand inflation, 91 days T-bill interest rate and ratio of quasi money supply to GDP has been found to be significant factor affecting the short term debt ratio of Pakistani commercial bank. Ratio of quasi money supply (M2) has been found to be significant factor affecting the total debt ratio of Bhutanese commercial bank. Similarly, inflation, ratio of stock market capitalization to GDP and ratio of quasi money supply to GDP are found to be significant factor affecting the long term debt ratio of Bhutanese commercial bank. Whereas, only ratio of quasi money supply to GDP has been found to be significant factor affecting the short term debt ratio of Bhutanese commercial bank.
The study remains enough ground for the future researchers in the same topic. The future studies can be done by using both primary and secondary data so that along with country specific variables, firm specific factors can be used to get more precise result. In addition to commercial banks, the future study may include other financial and non financial sector such as development bank, finance companies, hotel and service industries, manufacturing industries, micro finance, insurance companies, hydro power companies etc to make such research work more reliable and valid. The results are thus not representative of all sectors of the economy. Hence, future studies can include significant number of observations from the sectors other than banks and financial institutions.
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Barcode Call number Media type Location Section Status 180/D 658.152 GAU Books Uniglobe Library Technology Available
Title : Determinants of capital structure in selected Nepalese bank Material Type: printed text Authors: Subin Shrestha, Author Publication Date: 2013 Pagination: 87p. Size: GRP/Thesis Accompanying material: 1/B General note: Including bibliography Languages : English Descriptors: Banks
Banks and banking
Capital management
Capital structure
Commercial banks
NepalKeywords: 'capital management capital structure banks banks and banking commercial banks nepal Class number: 658.152 Abstract: The capital structure decision is crucial for any business organization. The decision is important because of the need to maximize returns to various organizational constituencies, and also because of the impact such a decision has on a firm’s ability to deal with its competitive environment (Mayers S.C., 1984). The capital structure of a firm is actually a mix of different securities. In general, a firm can choose among many alternative capital structures. It can issue a large amount of debt or very little debt. It can arrange lease financing, use warrants, issue convertible bonds, sign forward contracts or trade bond swaps. It can issue dozens of distinct securities in countless combinations; however, it attempts to find the particular combination that maximizes its overall market value.The main objective of this study is to analyze the determinants of capital structure adopted by the Nepalese bank. The specific objectives are to find out the major determinants of capital structure of banks in Nepal, to examine the relationship between financial leverage and size of the company, profitability, asset structure and level of economic growth, to analyze the variation of capital structure mix across different banks, to study the views of Managers and Executives regarding the determinants of capital structure.
The review of literature shows the sophisticated and the most contentious theories of capital structure were developed. Empirical studies took turn to the cross-sectional characteristics of individual firm’s capital structure particularly in fundamental determinants of financial structure during the period of 1970’s. After the development of agency cost and asymmetric information models of capital structure theory, most the empirical studies carried out after 1970’s are based on either agency cost model or an asymmetric information model. Finally, on the basis of the review of empirical works done so far, it can be concluded that the theories of capital structure are still not immunized against the dispute on what factors would guide the management to determine the proper capitals structure of the firms. In this study, some specific factors that determine the capital structure of Nepalese firms are examined.
The study is based on pooled data of 12 sample banks, the study sample period is from 2001 to 2012. This study employed regression analysis, correlation analysis, and portfolio analysis to explain variation in capital structure. Besides, the study also used descriptive statistics to analyze the views of the financial executives, which mainly focus on the qualitative part of the major expected return in the Nepalese stock market. The primary data have been collected through the questionnaire distributed to the senior branch manager, branch managers, management trainee, and junior officer of 12 sample banks.
The study also concluded that, on one way sorting of portfolio analysis, there exist a positive relationship between profitability and financial leverage. Similarly, the relationship between size and financial leverage is also positive, this indicates that as the profitability and size increases the financial leverage also increases. Further, the one way sorting of portfolio analysis by asset structure and level of economic growth also found to be positively related with financial leverage. In multiple regression analysis, profitability and asset structure found to be significant factor affecting financial leverage. whereas, size and level of economic growth do not have any power in explaining financial leverage ratio. The overall model is significant at 5% level of significance. The adjusted R square 0.68, indicates that 68% of variation are captured by the independent variables (profitability, size, asset structure, and level of economic growth).
The capital structure of banks is, however, still a relatively under-explored area in the banking literature. Currently, there is no clear understanding on how banks choose their capital structure and what factors influence their corporate financing behavior. This study focuses on profitability, size , asset structure and level of economic growth. It is assumed that this study is probably the new concept to do research and compare and critically analyzed findings and conclusions as to previous study which were undertaken in developed countries. It is very much required to study in the context of Nepal, whether the profitability, size, asset structure and level of economic growth explains the variation on financial leverage.
Determinants of capital structure in selected Nepalese bank [printed text] / Subin Shrestha, Author . - 2013 . - 87p. ; GRP/Thesis + 1/B.
Including bibliography
Languages : English
Descriptors: Banks
Banks and banking
Capital management
Capital structure
Commercial banks
NepalKeywords: 'capital management capital structure banks banks and banking commercial banks nepal Class number: 658.152 Abstract: The capital structure decision is crucial for any business organization. The decision is important because of the need to maximize returns to various organizational constituencies, and also because of the impact such a decision has on a firm’s ability to deal with its competitive environment (Mayers S.C., 1984). The capital structure of a firm is actually a mix of different securities. In general, a firm can choose among many alternative capital structures. It can issue a large amount of debt or very little debt. It can arrange lease financing, use warrants, issue convertible bonds, sign forward contracts or trade bond swaps. It can issue dozens of distinct securities in countless combinations; however, it attempts to find the particular combination that maximizes its overall market value.The main objective of this study is to analyze the determinants of capital structure adopted by the Nepalese bank. The specific objectives are to find out the major determinants of capital structure of banks in Nepal, to examine the relationship between financial leverage and size of the company, profitability, asset structure and level of economic growth, to analyze the variation of capital structure mix across different banks, to study the views of Managers and Executives regarding the determinants of capital structure.
The review of literature shows the sophisticated and the most contentious theories of capital structure were developed. Empirical studies took turn to the cross-sectional characteristics of individual firm’s capital structure particularly in fundamental determinants of financial structure during the period of 1970’s. After the development of agency cost and asymmetric information models of capital structure theory, most the empirical studies carried out after 1970’s are based on either agency cost model or an asymmetric information model. Finally, on the basis of the review of empirical works done so far, it can be concluded that the theories of capital structure are still not immunized against the dispute on what factors would guide the management to determine the proper capitals structure of the firms. In this study, some specific factors that determine the capital structure of Nepalese firms are examined.
The study is based on pooled data of 12 sample banks, the study sample period is from 2001 to 2012. This study employed regression analysis, correlation analysis, and portfolio analysis to explain variation in capital structure. Besides, the study also used descriptive statistics to analyze the views of the financial executives, which mainly focus on the qualitative part of the major expected return in the Nepalese stock market. The primary data have been collected through the questionnaire distributed to the senior branch manager, branch managers, management trainee, and junior officer of 12 sample banks.
The study also concluded that, on one way sorting of portfolio analysis, there exist a positive relationship between profitability and financial leverage. Similarly, the relationship between size and financial leverage is also positive, this indicates that as the profitability and size increases the financial leverage also increases. Further, the one way sorting of portfolio analysis by asset structure and level of economic growth also found to be positively related with financial leverage. In multiple regression analysis, profitability and asset structure found to be significant factor affecting financial leverage. whereas, size and level of economic growth do not have any power in explaining financial leverage ratio. The overall model is significant at 5% level of significance. The adjusted R square 0.68, indicates that 68% of variation are captured by the independent variables (profitability, size, asset structure, and level of economic growth).
The capital structure of banks is, however, still a relatively under-explored area in the banking literature. Currently, there is no clear understanding on how banks choose their capital structure and what factors influence their corporate financing behavior. This study focuses on profitability, size , asset structure and level of economic growth. It is assumed that this study is probably the new concept to do research and compare and critically analyzed findings and conclusions as to previous study which were undertaken in developed countries. It is very much required to study in the context of Nepal, whether the profitability, size, asset structure and level of economic growth explains the variation on financial leverage.
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Barcode Call number Media type Location Section Status 10/D 658.152 SHR Thesis/Dissertation Uniglobe Library Technology Available
Title : Effect of capital and liquidity risk on the profitability of Nepalese commercial banks Material Type: printed text Authors: Sita Chaudhary, Author Pagination: 117p. Size: GRP/Thesis Accompanying material: 10/B Languages : English Descriptors: Liquidity (Economics) Class number: 658.152 Abstract: Commercial banking is one of the important factor of Nepalese economy. Commercial banks are the main pillar of the financial system in Nepal. It makes the flow of resources for the rest of the character of the economy. Finance is life blood of the trade, commerce and are the vanes in the circulation of the funds in economy. Growth of any country depends upon the strong banking and financial system. As most of the economic depression are the result of the banking system failure. The importance of the banking sectors is immense in the progress and richness of any state. The economic development and prosperity comes from the well-developed and perfect banking system. Strong banking system plays important role in efficient allocation and utilization of credit. Bank is a backbone of all the industries, because every transaction where money is involved, the bank is the main pillar of funding (Haque& Tariq, 2012).
Capital adequacy ratio is one of the most significant current issues in banking which evaluate the amount of a bank’s efficiency and stability. Capital adequacy generally affects all entities. But as a term, it is most often used in discussing the position of firms in the financial section of the economy, and precisely, whether firms have sufficient capital to cover the risks that they confront (Abba, 2013).Jinghan (2010) asserts that banks need a high degree of liquidity in their assets portfolio. The bank must hold a sufficient large proportion of its assets the form of cash and liquid assets for the purpose enhancing customers’ confidence and corporate performance (profitability). According to Christian et al. (2008), capital adequacy measures provide significant information regarding a firm's returns; while a few of the individual variables representing asset quality and earnings are informative. Size and growth and loan exposure measures do not appear to have any significant explanatory power when examining returns.
This study attempts to explore the effect of capital and liquidity risk on performance of selected commercial banks in context of Nepal. This study is based on the secondary data for 20 commercial banks with 120 observations for the period of 2010/11 to 2015/16. The data and information are collected from various issues of Banking and Financial Statistics, Bank Supervision Report published by NRB and annual reports of the selected commercial banks. The research design adopted in this study is descriptive and causal comparative research design as this study examines the impact of capital adequacy ratio, debt to assets ratio, debt to equity ratio, non-performing loan ratio, liquidity ratio, quick ratio and bank size on performance of Nepalese commercial banks.
The result shows that average return on assets is highest for ADBL (2.90 percent) and lowest for JBNL (0.62 percent). The average earning per share is highest for EBL (82.28 rupees) and lowest for JBNL (5.09 rupees). The average capital adequacy ratio is highest for JBNL (18.47 percent) and lowest for NBL (0.95 percent). Similarly, average debt to assets ratio is highest for NBL (100.27 percent) and lowest for JBNL (85.45 percent). The average debt to equity ratio is highest for NSBI (15.92 times) and NBL (-7.31 times). Likewise, average liquidity ratio is highest for SCB (32.27 percent) and lowest for ADBL (8.21 percent). The average quick ratio is highest for SCBL (26.29 percent) and lowest SIDBL (9.94 percent). The average non-performing loan ratio is highest for NBB (14.48 percent) and lowest for SCB (0.13 percent) and average bank size is highest for EBL (RS. 25.50 billion) and lowest for JBNL (Rs. 23.41 billion).
The descriptive statistics for selected commercial bank shows that the average return on assets, earnings per share, capital adequacy ratio, debt to assets ratio, non-performing loan ratio, liquidity ratio, quick ratio, and bank size are 1.59 percent, 33.07 rupees, 12.34 percent, 91.37 percent, 9.37 times, 2.63 percent, 17.26 percent, and Rs. 24.58 billion.
The correlation matrix of selected commercial banks shows that capital adequacy ratio is positively correlated with return on assets. Similarly, quick ratio have positive relationship with return on assets. There is positive relationship of bank size with return on assets. However, there is negative relationship of debt to assets ratio, debt to equity ratio, liquidity ratio and non-performing asset ratio with return on assets. The result also shows that there is positive relationship of capital adequacy ratio, quick ratio and bank size and with earnings per share. However, there is negative relationship of debt to assets ratio, non-performing loan ratio, liquidity ratio, and debt to equity ratio with earnings per share.
The regression results indicate that capital adequacy ratio and quick ratio has positive impact on return on assets. Similarly, bank size has positive impact on return on assets. This study also reveals that debt to assets ratio debt to equity ratio, liquidity ratio and non-performing loan ratio has negative impact on the return on assets. Likewise, results shows that the capital adequacy ratio and quick ratio has positive impact on earnings per share. Similarly, bank size has positive impact on earnings per share. However, results shows that the debt to assets ratio, debt to equity ratio, non-performing loan ratio, and liquidity ratio has negative impact on earnings per share.
Effect of capital and liquidity risk on the profitability of Nepalese commercial banks [printed text] / Sita Chaudhary, Author . - [s.d.] . - 117p. ; GRP/Thesis + 10/B.
Languages : English
Descriptors: Liquidity (Economics) Class number: 658.152 Abstract: Commercial banking is one of the important factor of Nepalese economy. Commercial banks are the main pillar of the financial system in Nepal. It makes the flow of resources for the rest of the character of the economy. Finance is life blood of the trade, commerce and are the vanes in the circulation of the funds in economy. Growth of any country depends upon the strong banking and financial system. As most of the economic depression are the result of the banking system failure. The importance of the banking sectors is immense in the progress and richness of any state. The economic development and prosperity comes from the well-developed and perfect banking system. Strong banking system plays important role in efficient allocation and utilization of credit. Bank is a backbone of all the industries, because every transaction where money is involved, the bank is the main pillar of funding (Haque& Tariq, 2012).
Capital adequacy ratio is one of the most significant current issues in banking which evaluate the amount of a bank’s efficiency and stability. Capital adequacy generally affects all entities. But as a term, it is most often used in discussing the position of firms in the financial section of the economy, and precisely, whether firms have sufficient capital to cover the risks that they confront (Abba, 2013).Jinghan (2010) asserts that banks need a high degree of liquidity in their assets portfolio. The bank must hold a sufficient large proportion of its assets the form of cash and liquid assets for the purpose enhancing customers’ confidence and corporate performance (profitability). According to Christian et al. (2008), capital adequacy measures provide significant information regarding a firm's returns; while a few of the individual variables representing asset quality and earnings are informative. Size and growth and loan exposure measures do not appear to have any significant explanatory power when examining returns.
This study attempts to explore the effect of capital and liquidity risk on performance of selected commercial banks in context of Nepal. This study is based on the secondary data for 20 commercial banks with 120 observations for the period of 2010/11 to 2015/16. The data and information are collected from various issues of Banking and Financial Statistics, Bank Supervision Report published by NRB and annual reports of the selected commercial banks. The research design adopted in this study is descriptive and causal comparative research design as this study examines the impact of capital adequacy ratio, debt to assets ratio, debt to equity ratio, non-performing loan ratio, liquidity ratio, quick ratio and bank size on performance of Nepalese commercial banks.
The result shows that average return on assets is highest for ADBL (2.90 percent) and lowest for JBNL (0.62 percent). The average earning per share is highest for EBL (82.28 rupees) and lowest for JBNL (5.09 rupees). The average capital adequacy ratio is highest for JBNL (18.47 percent) and lowest for NBL (0.95 percent). Similarly, average debt to assets ratio is highest for NBL (100.27 percent) and lowest for JBNL (85.45 percent). The average debt to equity ratio is highest for NSBI (15.92 times) and NBL (-7.31 times). Likewise, average liquidity ratio is highest for SCB (32.27 percent) and lowest for ADBL (8.21 percent). The average quick ratio is highest for SCBL (26.29 percent) and lowest SIDBL (9.94 percent). The average non-performing loan ratio is highest for NBB (14.48 percent) and lowest for SCB (0.13 percent) and average bank size is highest for EBL (RS. 25.50 billion) and lowest for JBNL (Rs. 23.41 billion).
The descriptive statistics for selected commercial bank shows that the average return on assets, earnings per share, capital adequacy ratio, debt to assets ratio, non-performing loan ratio, liquidity ratio, quick ratio, and bank size are 1.59 percent, 33.07 rupees, 12.34 percent, 91.37 percent, 9.37 times, 2.63 percent, 17.26 percent, and Rs. 24.58 billion.
The correlation matrix of selected commercial banks shows that capital adequacy ratio is positively correlated with return on assets. Similarly, quick ratio have positive relationship with return on assets. There is positive relationship of bank size with return on assets. However, there is negative relationship of debt to assets ratio, debt to equity ratio, liquidity ratio and non-performing asset ratio with return on assets. The result also shows that there is positive relationship of capital adequacy ratio, quick ratio and bank size and with earnings per share. However, there is negative relationship of debt to assets ratio, non-performing loan ratio, liquidity ratio, and debt to equity ratio with earnings per share.
The regression results indicate that capital adequacy ratio and quick ratio has positive impact on return on assets. Similarly, bank size has positive impact on return on assets. This study also reveals that debt to assets ratio debt to equity ratio, liquidity ratio and non-performing loan ratio has negative impact on the return on assets. Likewise, results shows that the capital adequacy ratio and quick ratio has positive impact on earnings per share. Similarly, bank size has positive impact on earnings per share. However, results shows that the debt to assets ratio, debt to equity ratio, non-performing loan ratio, and liquidity ratio has negative impact on earnings per share.
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Barcode Call number Media type Location Section Status 358/D 658.152 CHA Thesis/Dissertation Uniglobe Library Technology Available
Title : Effect of liquidity risk on performance of Nepalese commercial banks Material Type: printed text Authors: Prakash Poudel, Author Publication Date: 2017 Pagination: 102p. Size: GRP/Thesis Accompanying material: 9/B Languages : English Descriptors: Liquidity (Economics) Class number: 658.152 Abstract: General banking business involves the mobilization of funds from excess or surplus units of the economy and giving out to deficit units as loans and advances. This is called financial intermediation. Liquidity is the ability of financial institutions to meet their short-term obligations (Olagunju et al., 2011). It is the ability of banks to change their assets into cash in a shortest possible time. The performance of these functions by banks opens them to several risks; prominent among these is liquidity risk. Liquidity risk is the risk of loss to a bank resulting from its inability to meet its needs for cash. The liquidity of a commercial bank is its ability to fund all contractual obligations as they fall due (Lartey et al., 2013).
Jenkinson (2008) illustrated that liquidity risk affects the performance of a bank. The bank may lose the confidence of its accountholders if funds are not provided to them in time. It is the ability of banks to change their assets into cash in a shortest possible time. Nwankwo (2004) explained that the banking liquidity management is simply to meet financial commitment whether it is withdrawing from a current account or interbank deposit or a maturing issue of commercial paper. Bank liquidity refers to the ability of a bank to raise certain amount of funds at a certain cost within a certain period of time to discharge obligations (Andabai and Bingilar, 2015). The greater the amount of funds a bank can raise in a certain time at a specified cost, the more liquid the bank is (Mehar, 2001). A firm should ensure that it does not suffer from lack-of or excess liquidity to meet its short-term compulsions. A study of liquidity is of major importance to both the internal and external analysis because of its close relationship with day-to-day operations of a business (Bhunia and Khan, 2011). Diamond and Rajan (1999) found that holding sufficient liquidity is necessary to ensure against liquidity risk.
Mathuva (2009) found that there is a positive relationship between profitability and liquidity of commercial banks in Kenya. Liquidity management determines the quantity of profits as well as the value of shareholders’ wealth. Bagchi (2013) found that there is a negative relationship between the measures of liquidity management and firms’ profitability. Liquidity of banks and profitability are highly correlated (Ayodele and Oke, 2013).
The major objective of the study is to analyse the effect of liquidity risk on performance in context to Nepalese commercial banks. The study is based on secondary data of 20 commercial banks with 140 observations for the period of 2010 to 2015. The main source of data includes 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 effect of liquidity risk on performance in context to Nepalese commercial banks.
The result shows that NBBL has highest average ROA, and ADB has the highest average NIM among the selected commercial banks throughout the study period. Similarly, the average current ratio is highest for BOK (6.66 times), average total deposit is highest for NABL (Rs. 65.73 billion), average non-performing loans is highest for ADB (6.49 percent), average capital adequacy ratio is highest for LBL (20.61 percent), average credit to deposit ratio is highest for ADB (105.45 percent), average quick ratio is highest for NCC (35.11 times) and average firm size is highest for NABL (Rs. 75 billion).
The descriptive statistics for selected Nepalese commercial banks shows that the average return on assets, total deposit, non-performing loans, capital adequacy ratio, credit to deposit ratio, quick ratio and firm size is 1.73 percent, 3.44 percent, 3.98 times, Rs. 34.39 billion, 2.06 percent, 12.8 percent, 78.10 percent, 15.13 times and Rs. 40.30 billion respectively.
The correlation matrix shows that total deposit, capital adequacy ratio, credit to deposit ratio and firm size are positively related to return on assets and net interest margin whereas current ratio and quick ratio are negatively related to return on assets and net interest margin.
The regression results show that current ratio and quick ratio have significant negative impact on the banks performance (ROA and NIM) indicating higher the current ratio and quick ratio, lower would be the return on assets and net interest margin. Similarly, capital adequacy ratio has significant positive impact on the return on assets and net interest margin. This indicates increase in capital adequacy ratio leads to increase in return on assets and net interest margin. The study also reveals that non-performing loans and credit to deposit ratio have significant positive impact with net interest margin indicating higher the non-performing loans and credit to deposit ratio, higher will be the net interest margin of Nepalese commercial banks.
Effect of liquidity risk on performance of Nepalese commercial banks [printed text] / Prakash Poudel, Author . - 2017 . - 102p. ; GRP/Thesis + 9/B.
Languages : English
Descriptors: Liquidity (Economics) Class number: 658.152 Abstract: General banking business involves the mobilization of funds from excess or surplus units of the economy and giving out to deficit units as loans and advances. This is called financial intermediation. Liquidity is the ability of financial institutions to meet their short-term obligations (Olagunju et al., 2011). It is the ability of banks to change their assets into cash in a shortest possible time. The performance of these functions by banks opens them to several risks; prominent among these is liquidity risk. Liquidity risk is the risk of loss to a bank resulting from its inability to meet its needs for cash. The liquidity of a commercial bank is its ability to fund all contractual obligations as they fall due (Lartey et al., 2013).
Jenkinson (2008) illustrated that liquidity risk affects the performance of a bank. The bank may lose the confidence of its accountholders if funds are not provided to them in time. It is the ability of banks to change their assets into cash in a shortest possible time. Nwankwo (2004) explained that the banking liquidity management is simply to meet financial commitment whether it is withdrawing from a current account or interbank deposit or a maturing issue of commercial paper. Bank liquidity refers to the ability of a bank to raise certain amount of funds at a certain cost within a certain period of time to discharge obligations (Andabai and Bingilar, 2015). The greater the amount of funds a bank can raise in a certain time at a specified cost, the more liquid the bank is (Mehar, 2001). A firm should ensure that it does not suffer from lack-of or excess liquidity to meet its short-term compulsions. A study of liquidity is of major importance to both the internal and external analysis because of its close relationship with day-to-day operations of a business (Bhunia and Khan, 2011). Diamond and Rajan (1999) found that holding sufficient liquidity is necessary to ensure against liquidity risk.
Mathuva (2009) found that there is a positive relationship between profitability and liquidity of commercial banks in Kenya. Liquidity management determines the quantity of profits as well as the value of shareholders’ wealth. Bagchi (2013) found that there is a negative relationship between the measures of liquidity management and firms’ profitability. Liquidity of banks and profitability are highly correlated (Ayodele and Oke, 2013).
The major objective of the study is to analyse the effect of liquidity risk on performance in context to Nepalese commercial banks. The study is based on secondary data of 20 commercial banks with 140 observations for the period of 2010 to 2015. The main source of data includes 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 effect of liquidity risk on performance in context to Nepalese commercial banks.
The result shows that NBBL has highest average ROA, and ADB has the highest average NIM among the selected commercial banks throughout the study period. Similarly, the average current ratio is highest for BOK (6.66 times), average total deposit is highest for NABL (Rs. 65.73 billion), average non-performing loans is highest for ADB (6.49 percent), average capital adequacy ratio is highest for LBL (20.61 percent), average credit to deposit ratio is highest for ADB (105.45 percent), average quick ratio is highest for NCC (35.11 times) and average firm size is highest for NABL (Rs. 75 billion).
The descriptive statistics for selected Nepalese commercial banks shows that the average return on assets, total deposit, non-performing loans, capital adequacy ratio, credit to deposit ratio, quick ratio and firm size is 1.73 percent, 3.44 percent, 3.98 times, Rs. 34.39 billion, 2.06 percent, 12.8 percent, 78.10 percent, 15.13 times and Rs. 40.30 billion respectively.
The correlation matrix shows that total deposit, capital adequacy ratio, credit to deposit ratio and firm size are positively related to return on assets and net interest margin whereas current ratio and quick ratio are negatively related to return on assets and net interest margin.
The regression results show that current ratio and quick ratio have significant negative impact on the banks performance (ROA and NIM) indicating higher the current ratio and quick ratio, lower would be the return on assets and net interest margin. Similarly, capital adequacy ratio has significant positive impact on the return on assets and net interest margin. This indicates increase in capital adequacy ratio leads to increase in return on assets and net interest margin. The study also reveals that non-performing loans and credit to deposit ratio have significant positive impact with net interest margin indicating higher the non-performing loans and credit to deposit ratio, higher will be the net interest margin of Nepalese commercial banks.
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Barcode Call number Media type Location Section Status 313/D 658.152 POU Thesis/Dissertation Uniglobe Library Technology Available
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