Title :	Impact of firm specific and macroeconomic factor on profitability of Nepalese financial institutions
Material Type:	printed text
Authors:	Amrit Maharjan, Author
Publication Date:	2016
Pagination:	137p.
Size:	GRP/Thesis
Accompanying material:	7/B
Languages :	English
Descriptors:	Macroeconomics
Class number:	332.632
Abstract:	Banking industry is an essential part of the economy; it plays an important role as intermediary to serve the economy. From the economic point of view, insurance is a business through which the scattered savings are collected in the form of premium and become an important source of funds for capital investment, though relatively a smaller in its size as shown a slow but smooth growth in its assets base matching with of overall financial sector in Nepal. Profitability is a silent feature and main pillar of discussion as experienced of a business entity. A basic measure of bank profitability is the return on asset (ROA) which corrects for the size of the bank. It is true that ROA provides useful and necessary information on bank profitability but this is not on the major interest of the bank‟s owners (equity holders). They are more concerned about how much the bank is earning on their equity investment, an amount that is measured by the return on equity (ROE), the net income per currency of equity capital.The major objective of the study is to determine the factor affecting the performance of the selected commercial banks and insurance companies in Nepal. The specific objectives of the study are to analyze the structure and pattern of bank capital adequacy, liquidity, bank size, asset quality, GDP, and inflation on the bank profitability measured by return on assets and return on equity of commercial banks; to analyse the structure and pattern of leverage, tangibility, growth, company age, company size, GDP, and inflation on the company profitability measured by return on assets and return on equity of Nepalese insurance companies; and to study the impact of internal variables of commercial bank and insurance companies with external variables meaured by GDP and inflaiton on Nepalese financial profitability. Out of 29 commercial banks 15 banks has been taken as sample size. The study used the panel data for the period of 7 years from the year 2007/08 to 2013/2014. Similarly, stratified sampling technique was used to select 16 sample insurance companies from the population of 26 insurance companies for the period of 8 years from the year 2006/07 to 2013/2014. The study concludes that capital adequacy, liquidity management, GDP, inflation, size and assets quality are among the most dominant variables that affect the return on assets in context of Nepalese commercial banks. The relationship between bank profitability (ROA) and assets quality are positive and significant. Similarly, tangibility and size also have positively insignificant impact on profitability (ROA). It concludes that assets quality and capital adequacy is the strongest VIII determinant of return on assets in Nepalese commercial banks. This finding suggests that the asset quality and capital adequacy of the bank helps to increase the profitability of banking sectors. From the analysis, it is revealed that GDP and size have positive and significantly impact on the performance of commercial banks in terms of ROE. Among the observed correlation, bank size is the strong determinant of return on equity in Nepalese commercial banks. The study on insurance companies concludes that leverage, tangibility, company size, growth and company age are among the most dominant variables that affect the return on assets of Nepalese insurance companies. The relationship of profitability (ROA) with tangibility and company age are positive and significant. This indicates that higher the tangibility and company age higher would be the profitability of insurance companies. Likewise, capital adequacy, liquidity management, bank size and GDP are the major determining variables of bank profitability in terms of return on equity.

Impact of firm specific and macroeconomic factor on profitability of Nepalese financial institutions [printed text] / Amrit Maharjan, Author . - 2016 . - 137p. ; GRP/Thesis + 7/B.
Languages : English

Descriptors:	Macroeconomics
Class number:	332.632
Abstract:	Banking industry is an essential part of the economy; it plays an important role as intermediary to serve the economy. From the economic point of view, insurance is a business through which the scattered savings are collected in the form of premium and become an important source of funds for capital investment, though relatively a smaller in its size as shown a slow but smooth growth in its assets base matching with of overall financial sector in Nepal. Profitability is a silent feature and main pillar of discussion as experienced of a business entity. A basic measure of bank profitability is the return on asset (ROA) which corrects for the size of the bank. It is true that ROA provides useful and necessary information on bank profitability but this is not on the major interest of the bank‟s owners (equity holders). They are more concerned about how much the bank is earning on their equity investment, an amount that is measured by the return on equity (ROE), the net income per currency of equity capital.The major objective of the study is to determine the factor affecting the performance of the selected commercial banks and insurance companies in Nepal. The specific objectives of the study are to analyze the structure and pattern of bank capital adequacy, liquidity, bank size, asset quality, GDP, and inflation on the bank profitability measured by return on assets and return on equity of commercial banks; to analyse the structure and pattern of leverage, tangibility, growth, company age, company size, GDP, and inflation on the company profitability measured by return on assets and return on equity of Nepalese insurance companies; and to study the impact of internal variables of commercial bank and insurance companies with external variables meaured by GDP and inflaiton on Nepalese financial profitability. Out of 29 commercial banks 15 banks has been taken as sample size. The study used the panel data for the period of 7 years from the year 2007/08 to 2013/2014. Similarly, stratified sampling technique was used to select 16 sample insurance companies from the population of 26 insurance companies for the period of 8 years from the year 2006/07 to 2013/2014. The study concludes that capital adequacy, liquidity management, GDP, inflation, size and assets quality are among the most dominant variables that affect the return on assets in context of Nepalese commercial banks. The relationship between bank profitability (ROA) and assets quality are positive and significant. Similarly, tangibility and size also have positively insignificant impact on profitability (ROA). It concludes that assets quality and capital adequacy is the strongest VIII determinant of return on assets in Nepalese commercial banks. This finding suggests that the asset quality and capital adequacy of the bank helps to increase the profitability of banking sectors. From the analysis, it is revealed that GDP and size have positive and significantly impact on the performance of commercial banks in terms of ROE. Among the observed correlation, bank size is the strong determinant of return on equity in Nepalese commercial banks. The study on insurance companies concludes that leverage, tangibility, company size, growth and company age are among the most dominant variables that affect the return on assets of Nepalese insurance companies. The relationship of profitability (ROA) with tangibility and company age are positive and significant. This indicates that higher the tangibility and company age higher would be the profitability of insurance companies. Likewise, capital adequacy, liquidity management, bank size and GDP are the major determining variables of bank profitability in terms of return on equity.