| Title : | Effect of bank regulations and competition on performance of Nepalese commercial banks | | Material Type: | printed text | | Authors: | Kabi Raj Bhatta, Author | | Publication Date: | 2017 | | Pagination: | 112p. | | Size: | GRP/Thesis | | Accompanying material: | 11/B | | Languages : | English | | Descriptors: | Banks and banking
| | Class number: | 346.082 | | Abstract: | The liberalization in the Nepalese economy has caused stiff competition within the banking industry. The banks are facing direct competition from financial markets and the development of disintermediation and financial innovation. Competition has the usual efficiency benefits in banking of reducing allocated and productive deadweight losses as well as fostering innovation. Similarly, regulatory measures in the monetary policy are important in preserving the sound financial stability in the banking sector.
This study attempts to observe the effect of bank regulations and competition on the performance of Nepalese commercial banks. This study is based on secondary data of 17 commercial banks of Nepal for the time period of 2008/09 to 2015/16, leading to a total of 136 observations. Data and information have been collected from the Banking and Financial Statistics, Bank Supervision Report published by Nepal Rastra Bank and annual reports of the selected commercial banks. This study has employed descriptive research design and casual comparative research design as it deals with the relationship between bank regulations and competition with the performance of Nepalese commercial banks.
The result reveals that average price earnings ratio is highest for MBL (42.15 times) and lowest for NBBL (9.69 times). The average market price per share is highest for SCBL (Rs. 2881.63 per share) and lowest for NCC (Rs. 160.38 per share). The average capital adequacy ratio is highest for SABL (16.94 percent) and lowest for the NCC (10.04 percent). The average cash reserve ratio is highest for SUBL (30.57 percent) and lowest for HBL (7.17 percent). SABL has the highest average credit to deposit ratio (88.61 percent) and lowest for SCBL (51.35 percent). NIBL has the highest average market share (10.26 percent) and lowest for SABL (2.57 percent). The average number of branches is highest for NBL (48 branches) and lowest for SCBL (15 branches). NBL has the highest average bank age (29.50 years) and lowest for NMB (5.50 years). The broad money supply growth rate is highest in the year 2008/09 (27.30 percent) and lowest in 2010/11 (12.30 percent). Inflation is highest in the year 2009/10 (12.6 percent) and lowest in 2008/09 (6.7 percent).
The descriptive statistics for selected commercial bank shows that the average market price per share is Rs. 861.06, average price earnings ratio is 26.81 times, average capital adequacy ratio is 12.22 percent, average cash reserve ratio is 14.12 percent, average credit to deposit ratio is 74.93 percent, average bank age is 15.91 years, average market share is 5.28 percent, average number of branches is 30, average broad money supply growth rate is 19.23 percent and average inflation rate is 9.13 percent.
The correlation matrix shows that capital adequacy ratio, cash reserve ratio and credit to deposit ratio are negatively correlated with market price per share. However, the market share and number of branches, bank age, broad money supply growth rate and ownership structure have positive relationship with market price per share. However, the annual inflation rate has negative relationship with market price per share. Likewise, the Capital adequacy ratio, market share and number of branches have positive relationship with price earnings ratio. Similarly, bank age, broad money supply growth rate and ownership structure have positive relationship with price earnings ratio. However, cash reserve ratio, credit to deposit ratio and annual inflation rate have negative relationship with price earnings ratio.
The regression reveals that capital adequacy ratio, market share, bank age and broad money supply growth rate has positive and significant impact on price earnings ratio. It indicates that higher the capital adequacy ratio, market share, bank age and broad money supply growth rate, higher would be the price earnings ratio. Similarly, number of branches and ownership structure has positive impact on price earnings ratio. It indicates that higher the number of branches and ownership structure, higher would be the price earnings ratio. However, cash reserve ratio, credit to deposit ratio and annual inflation rate have negative and significant impact on price earnings ratio. It indicates that higher the cash reserve ratio, credit to deposit ratio and annual inflation rate, lower would be the price earnings ratio.
The study also reveals that market share, number of branches, bank age, broad money supply growth rate and ownership structure has positive and significant impact in market price per share. It indicates that higher the market share, number of branches, bank age, broad money supply growth rate and ownership structure, higher would be the market price per share. However, the cash reserve ratio and credit to deposit ratio has negative and significant impact on market price per share. It indicates that higher the cash reserve ratio and credit to deposit ratio, lower would be the market price per share. Similarly, the capital adequacy ratio and annual inflation rate has negative impact on the market price per share. It indicates that higher the capital adequacy ratio and annual inflation rate, lower would be the market price per share.
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Effect of bank regulations and competition on performance of Nepalese commercial banks [printed text] / Kabi Raj Bhatta, Author . - 2017 . - 112p. ; GRP/Thesis + 11/B. Languages : English | Descriptors: | Banks and banking
| | Class number: | 346.082 | | Abstract: | The liberalization in the Nepalese economy has caused stiff competition within the banking industry. The banks are facing direct competition from financial markets and the development of disintermediation and financial innovation. Competition has the usual efficiency benefits in banking of reducing allocated and productive deadweight losses as well as fostering innovation. Similarly, regulatory measures in the monetary policy are important in preserving the sound financial stability in the banking sector.
This study attempts to observe the effect of bank regulations and competition on the performance of Nepalese commercial banks. This study is based on secondary data of 17 commercial banks of Nepal for the time period of 2008/09 to 2015/16, leading to a total of 136 observations. Data and information have been collected from the Banking and Financial Statistics, Bank Supervision Report published by Nepal Rastra Bank and annual reports of the selected commercial banks. This study has employed descriptive research design and casual comparative research design as it deals with the relationship between bank regulations and competition with the performance of Nepalese commercial banks.
The result reveals that average price earnings ratio is highest for MBL (42.15 times) and lowest for NBBL (9.69 times). The average market price per share is highest for SCBL (Rs. 2881.63 per share) and lowest for NCC (Rs. 160.38 per share). The average capital adequacy ratio is highest for SABL (16.94 percent) and lowest for the NCC (10.04 percent). The average cash reserve ratio is highest for SUBL (30.57 percent) and lowest for HBL (7.17 percent). SABL has the highest average credit to deposit ratio (88.61 percent) and lowest for SCBL (51.35 percent). NIBL has the highest average market share (10.26 percent) and lowest for SABL (2.57 percent). The average number of branches is highest for NBL (48 branches) and lowest for SCBL (15 branches). NBL has the highest average bank age (29.50 years) and lowest for NMB (5.50 years). The broad money supply growth rate is highest in the year 2008/09 (27.30 percent) and lowest in 2010/11 (12.30 percent). Inflation is highest in the year 2009/10 (12.6 percent) and lowest in 2008/09 (6.7 percent).
The descriptive statistics for selected commercial bank shows that the average market price per share is Rs. 861.06, average price earnings ratio is 26.81 times, average capital adequacy ratio is 12.22 percent, average cash reserve ratio is 14.12 percent, average credit to deposit ratio is 74.93 percent, average bank age is 15.91 years, average market share is 5.28 percent, average number of branches is 30, average broad money supply growth rate is 19.23 percent and average inflation rate is 9.13 percent.
The correlation matrix shows that capital adequacy ratio, cash reserve ratio and credit to deposit ratio are negatively correlated with market price per share. However, the market share and number of branches, bank age, broad money supply growth rate and ownership structure have positive relationship with market price per share. However, the annual inflation rate has negative relationship with market price per share. Likewise, the Capital adequacy ratio, market share and number of branches have positive relationship with price earnings ratio. Similarly, bank age, broad money supply growth rate and ownership structure have positive relationship with price earnings ratio. However, cash reserve ratio, credit to deposit ratio and annual inflation rate have negative relationship with price earnings ratio.
The regression reveals that capital adequacy ratio, market share, bank age and broad money supply growth rate has positive and significant impact on price earnings ratio. It indicates that higher the capital adequacy ratio, market share, bank age and broad money supply growth rate, higher would be the price earnings ratio. Similarly, number of branches and ownership structure has positive impact on price earnings ratio. It indicates that higher the number of branches and ownership structure, higher would be the price earnings ratio. However, cash reserve ratio, credit to deposit ratio and annual inflation rate have negative and significant impact on price earnings ratio. It indicates that higher the cash reserve ratio, credit to deposit ratio and annual inflation rate, lower would be the price earnings ratio.
The study also reveals that market share, number of branches, bank age, broad money supply growth rate and ownership structure has positive and significant impact in market price per share. It indicates that higher the market share, number of branches, bank age, broad money supply growth rate and ownership structure, higher would be the market price per share. However, the cash reserve ratio and credit to deposit ratio has negative and significant impact on market price per share. It indicates that higher the cash reserve ratio and credit to deposit ratio, lower would be the market price per share. Similarly, the capital adequacy ratio and annual inflation rate has negative impact on the market price per share. It indicates that higher the capital adequacy ratio and annual inflation rate, lower would be the market price per share.
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