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Refine your search Apply to external sourcesDeterminants of banks lending behavior: a survey of selected commercial banks in Nepal / Rakshya Gautam
Title : Determinants of banks lending behavior: a survey of selected commercial banks in Nepal Material Type: printed text Authors: Rakshya Gautam, Author Publication Date: 2013 Pagination: 78p. Size: GRP/Thesis Accompanying material: 2/D General note: Including bibliography Languages : English Descriptors: Bank and banking
Bank loans
Commercial banks
NepalKeywords: 'banks lending behavior Commercial banks Nepal Bank and banking financial institutions' Class number: 332.175 Abstract: Bank lending behavior of the bank can be defined as the preferences and choices of bank while making loans and advances. In other words, bank lending behavior is the selection of bank’s investment on loans and advances on the account of constraints given by regulators, opportunities or threats provided by macroeconomic, factors and the preferences of customers etc.
This study investigates the determinants of bank lending behavior of selected Nepalese commercial banks. The specific objectives of this study were to examine the effect of deposit growth rate, bank discount rate, cash reserve ratio, GDP, CD ratio, ROA, lagged LOA and interest spread on bank loans and advances, to analyze the impact of deposit growth, capital growth, and non-performing loan growth rate, earning assets growth rate on loan growth rate of the banks, to access the impact of input price of deposit, input price of equipment/ fixed capital, capitalization ratio, loans and advances and log of total assets on the output price of loan, to assess the views of bank employees on lending behavior of the bank.
The research was based on primary and secondary data. The methods used for secondary data analysis included descriptive statistics, regression analysis, etc. Similarly the methods used for primary data analysis included percentage frequency distribution, mean scores, standard deviation and likert scale.
The major conclusion of the study is that bank discount rate, GDP, CD ratio, LOA lagged and WAIS explain the loans and advances in the context of Nepalese commercial banks. Similarly in the case of loan growth rate deposit growth rate, earning assets growth rate are the important and significant explanatory variables. Similarly input price of deposit and input price of equipment explains the output price of loan in case of Nepal. Therefore banks should strive hard to manage their deposits and earning assets efficiently so that their objective of profitability can be achieved and input price of deposit and input price of equipment explain the output price of loan. Similarly in the case of primary study, the study concludes that liquidity position of the market have strong impact on bank lending behavior. Similarly there should not be mismatch between the input price of deposit and output price of loan. And in Nepalese commercial banks there is moderate effect of nonperforming loan on bank lending. Among the macro economic variables bank lending rate is ranked as the most important factor which supports the result of secondary analysis. GDP is ranked as least important factor in primary analysis where as it plays an important role in secondary analysis. Respondents ranked deposit growth rate as most important factor affecting the loan growth rate which supports the result of secondary analysis.
Determinants of banks lending behavior: a survey of selected commercial banks in Nepal [printed text] / Rakshya Gautam, Author . - 2013 . - 78p. ; GRP/Thesis + 2/D.
Including bibliography
Languages : English
Descriptors: Bank and banking
Bank loans
Commercial banks
NepalKeywords: 'banks lending behavior Commercial banks Nepal Bank and banking financial institutions' Class number: 332.175 Abstract: Bank lending behavior of the bank can be defined as the preferences and choices of bank while making loans and advances. In other words, bank lending behavior is the selection of bank’s investment on loans and advances on the account of constraints given by regulators, opportunities or threats provided by macroeconomic, factors and the preferences of customers etc.
This study investigates the determinants of bank lending behavior of selected Nepalese commercial banks. The specific objectives of this study were to examine the effect of deposit growth rate, bank discount rate, cash reserve ratio, GDP, CD ratio, ROA, lagged LOA and interest spread on bank loans and advances, to analyze the impact of deposit growth, capital growth, and non-performing loan growth rate, earning assets growth rate on loan growth rate of the banks, to access the impact of input price of deposit, input price of equipment/ fixed capital, capitalization ratio, loans and advances and log of total assets on the output price of loan, to assess the views of bank employees on lending behavior of the bank.
The research was based on primary and secondary data. The methods used for secondary data analysis included descriptive statistics, regression analysis, etc. Similarly the methods used for primary data analysis included percentage frequency distribution, mean scores, standard deviation and likert scale.
The major conclusion of the study is that bank discount rate, GDP, CD ratio, LOA lagged and WAIS explain the loans and advances in the context of Nepalese commercial banks. Similarly in the case of loan growth rate deposit growth rate, earning assets growth rate are the important and significant explanatory variables. Similarly input price of deposit and input price of equipment explains the output price of loan in case of Nepal. Therefore banks should strive hard to manage their deposits and earning assets efficiently so that their objective of profitability can be achieved and input price of deposit and input price of equipment explain the output price of loan. Similarly in the case of primary study, the study concludes that liquidity position of the market have strong impact on bank lending behavior. Similarly there should not be mismatch between the input price of deposit and output price of loan. And in Nepalese commercial banks there is moderate effect of nonperforming loan on bank lending. Among the macro economic variables bank lending rate is ranked as the most important factor which supports the result of secondary analysis. GDP is ranked as least important factor in primary analysis where as it plays an important role in secondary analysis. Respondents ranked deposit growth rate as most important factor affecting the loan growth rate which supports the result of secondary analysis.
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Barcode Call number Media type Location Section Status 27/D 332.175 GAU Thesis/Dissertation Uniglobe Library Social Sciences Available
Title : Determinants of loan loss provision in Nepalese commercial banks Material Type: printed text Authors: Deepa Bhusal, Author Publication Date: 2018 Pagination: 96p. Size: GRP/Thesis Accompanying material: 11/B Languages : English Descriptors: Bank loans
Loan loss provisionKeywords: loans loan loss banks banking management financial institutions commercial banks' Class number: 332.12 Abstract: In today’s fast-moving business environment, banks are exposed to a large number of risks: credit risk, liquidity risk, market risk, operational risk, interest rate exchange risk, etc. Due to such exposure to various risks, efficient risk management is required. Managing risk is one of the basic tasks to be done, once it has been identified and known. Shafiq& Nasr (2010) argued that managing a risk in advance is far better than waiting for its occurrence. The focus of good risk management is the identification and treatment of risks. Its objective is to add maximum sustainable value to all the activities of the organization.
The loan loss provision increase with the riskiness that bank makes on the loan. A bank making a small number of risky loans will have a low loan loss provision compared to a bank taking higher risks. The high quality loan requires low loan loss provision, whereas bad loan requires high loan loss provision. A loan loss provision is considered as an adjustment of the bank value of a loan which regards future changes in the loan’s value due to default events (Hlawatch&Ostrowski, 2010).
Managerial discretion in the use of loan loss provision (LLP) has attracted considerable attention from both regulators and academics for a long time. Earlier studies focused on the use of LLP for capital management (Ahmed et al., 1999). More recently, the study focuses on the timeliness of LLP over the business cycle and the associated effects on banks' lending behavior and financial stability (Laeven&Majnoni, 2003; Bikker&Metzemakers, 2005 and Beatty & Liao, 2011). If banks account for the fact that the latent credit risk in their loan portfolios rises during upswings when competition between banks increases and monitoring efforts decrease, they should increase their provisioning level during upswings and lower it during downturns as losses occur, thus build and release provisions in a countercyclical fashion.
The major purpose of this study is to analyze the impact of bank specific and macroeconomic factors on loan loss provisions in Nepalese commercial banks. The specific objectives of this study are: a) To analyze the structure and pattern of dependent (LLP1 and LLP2) and independent variables (capital adequacy ratio, loan growth, bank size and non-performing loan), b) To examine the relationship between macroeconomic variable like GDP growth rate, inflation rate and interest rate with loan loss provision, c) To identify the effect of capital adequacy ratio, loan growth and bank size on loan loss provision, d) To examine the relationship between non-performing loan and loan loss provision of the bank.
The study is based on the secondary data which were gathered for a sample of 18 commercial banks of Nepal within the time period from 2008 to 2015, leading to the total of 144 observations. This study employs descriptive and causal comparative research design to deal with bank specific and macroeconomic determinants of loan loss provision of Nepalese commercial banks. More specifically, the study examines the effect of capital adequacy ratio, loan growth, bank size, non-performing loan, GDP growth rate, inflation rate and interest rate on loan loss provision. The main sources of data are various issues of banking and financial statistics, World Bank, bank supervision reports of NRB and various annual reports of selected commercial banks.
The average loan loss provision to total loan is highest for NBB (9.88 percent) and lowest for SCBL (1.34 percent).CZBL has the highest average loan loss provision to non-performing loan of 7.29 times and HBL has lowest of 1.25 times.The average capital adequacy ratio is highest for SCBL (15.18 percent) and lowest for SBL (10.76 percent).The analysis of loan growth indicates that average loan growth is highest for GBIME (38.33 percent) and lowest for SCBL (11.73 percent).The average bank size is highest for NABIL (83695.83 million) and lowest for NCC (22907.86 million).NBB has the highest average non-performing loan of 6.39 percent and EBL has lowest of 0.51 percent.
The descriptive statistics for the variables are used in this study. Clearly, The average loan loss provisions to total loan and loan loss provision to non-performing loan for 18 sample banks is 2.62 percent and 2.85 times respectively. Similarly, average capital adequacy ratio is 12.31 percent; loan growth is 23.71 percent. Similarly, the mean proportion of bank size is 45266.58 million, non-performing loan is 1.73 percent, GDP growth rate is 3.86 percent and inflation rate is 9.53 percent. Furthermore, the average interest rate is of 3.25 percent.
From the analysis, non-performing loan, inflation rate and interest rate are positively correlated with loan loss provision to total loan. This study reveals that capital adequacy ratio, loan growth, bank size and GDP growth rate are negatively correlated with loan loss provision to total loan. It indicates that higher the capital adequacy ratio, loan growth, bank size and GDP growth rate, lower would be loan loss provision to total loan. The result also shows that loan growth, inflation rate and interest rate are positively correlated to loan loss provision to non-performing loan. Also, this study reveals that capital adequacy ratio, non-performing loan, bank size and GDP growth rate are negatively correlated to loan loss provision to non-performing loan.
The regression result found beta coefficient of capital adequacy ratio is negative with loan loss provision to total loan and loan loss provision to non-performing loan which indicates that banks having higher capital adequacy ratio have lower loan loss provision to total loan and loan loss provision to non-performing loan. The beta coefficient is significant at 1 percent level of significance for loan loss provision to total loan and significant at 5 percent level of significance for loan loss provision to non-performing loan. The beta coefficient for loan growth is negative for loan loss provision to total loan and positive for loan loss provision to non-performing loan. The beta coefficient for loan growth is insignificant for both loan loss provision to total loan and loan loss provision to non-performing loan. The result found negative beta coefficient for the bank size with loan loss provision to total loan and loan loss provision to non-performing loan. The coefficient is significant at 5 percent level of significance for bank size with loan loss provision to total loan.
The result shows positive beta coefficient for non-performing loan with loan loss provision to total loan. However, beta coefficient for non-performing loan is negative with loan loss provision to non-performing loan. The beta coefficient for non-performing loan is significant at 1 percent level of significance. The beta coefficient for GDP growth rate is negative and insignificant for all proxy of loan loss provision i.e. loan loss provision to total loan and loan loss provision to non-performing loan which means that with an increase in GDP growth rate leads to decrease in loan loss provision. The positive beta coefficient is observed for inflation rate with loan loss provision to total loan and loan loss provision to non-performing loan which indicates that higher the inflation rate; higher would be loan loss provision to total loan and loan loss provision to non-performing loan. The beta coefficient is insignificant for inflation rate. The result found positive beta coefficient for the interest rate with loan loss provision to total loan and loan loss provision to non-performing loan. The coefficient is significant at 1 percent level of significance for interest rate with loan loss provision to non-performing loan and insignificant for loan loss provision to total loan.
Determinants of loan loss provision in Nepalese commercial banks [printed text] / Deepa Bhusal, Author . - 2018 . - 96p. ; GRP/Thesis + 11/B.
Languages : English
Descriptors: Bank loans
Loan loss provisionKeywords: loans loan loss banks banking management financial institutions commercial banks' Class number: 332.12 Abstract: In today’s fast-moving business environment, banks are exposed to a large number of risks: credit risk, liquidity risk, market risk, operational risk, interest rate exchange risk, etc. Due to such exposure to various risks, efficient risk management is required. Managing risk is one of the basic tasks to be done, once it has been identified and known. Shafiq& Nasr (2010) argued that managing a risk in advance is far better than waiting for its occurrence. The focus of good risk management is the identification and treatment of risks. Its objective is to add maximum sustainable value to all the activities of the organization.
The loan loss provision increase with the riskiness that bank makes on the loan. A bank making a small number of risky loans will have a low loan loss provision compared to a bank taking higher risks. The high quality loan requires low loan loss provision, whereas bad loan requires high loan loss provision. A loan loss provision is considered as an adjustment of the bank value of a loan which regards future changes in the loan’s value due to default events (Hlawatch&Ostrowski, 2010).
Managerial discretion in the use of loan loss provision (LLP) has attracted considerable attention from both regulators and academics for a long time. Earlier studies focused on the use of LLP for capital management (Ahmed et al., 1999). More recently, the study focuses on the timeliness of LLP over the business cycle and the associated effects on banks' lending behavior and financial stability (Laeven&Majnoni, 2003; Bikker&Metzemakers, 2005 and Beatty & Liao, 2011). If banks account for the fact that the latent credit risk in their loan portfolios rises during upswings when competition between banks increases and monitoring efforts decrease, they should increase their provisioning level during upswings and lower it during downturns as losses occur, thus build and release provisions in a countercyclical fashion.
The major purpose of this study is to analyze the impact of bank specific and macroeconomic factors on loan loss provisions in Nepalese commercial banks. The specific objectives of this study are: a) To analyze the structure and pattern of dependent (LLP1 and LLP2) and independent variables (capital adequacy ratio, loan growth, bank size and non-performing loan), b) To examine the relationship between macroeconomic variable like GDP growth rate, inflation rate and interest rate with loan loss provision, c) To identify the effect of capital adequacy ratio, loan growth and bank size on loan loss provision, d) To examine the relationship between non-performing loan and loan loss provision of the bank.
The study is based on the secondary data which were gathered for a sample of 18 commercial banks of Nepal within the time period from 2008 to 2015, leading to the total of 144 observations. This study employs descriptive and causal comparative research design to deal with bank specific and macroeconomic determinants of loan loss provision of Nepalese commercial banks. More specifically, the study examines the effect of capital adequacy ratio, loan growth, bank size, non-performing loan, GDP growth rate, inflation rate and interest rate on loan loss provision. The main sources of data are various issues of banking and financial statistics, World Bank, bank supervision reports of NRB and various annual reports of selected commercial banks.
The average loan loss provision to total loan is highest for NBB (9.88 percent) and lowest for SCBL (1.34 percent).CZBL has the highest average loan loss provision to non-performing loan of 7.29 times and HBL has lowest of 1.25 times.The average capital adequacy ratio is highest for SCBL (15.18 percent) and lowest for SBL (10.76 percent).The analysis of loan growth indicates that average loan growth is highest for GBIME (38.33 percent) and lowest for SCBL (11.73 percent).The average bank size is highest for NABIL (83695.83 million) and lowest for NCC (22907.86 million).NBB has the highest average non-performing loan of 6.39 percent and EBL has lowest of 0.51 percent.
The descriptive statistics for the variables are used in this study. Clearly, The average loan loss provisions to total loan and loan loss provision to non-performing loan for 18 sample banks is 2.62 percent and 2.85 times respectively. Similarly, average capital adequacy ratio is 12.31 percent; loan growth is 23.71 percent. Similarly, the mean proportion of bank size is 45266.58 million, non-performing loan is 1.73 percent, GDP growth rate is 3.86 percent and inflation rate is 9.53 percent. Furthermore, the average interest rate is of 3.25 percent.
From the analysis, non-performing loan, inflation rate and interest rate are positively correlated with loan loss provision to total loan. This study reveals that capital adequacy ratio, loan growth, bank size and GDP growth rate are negatively correlated with loan loss provision to total loan. It indicates that higher the capital adequacy ratio, loan growth, bank size and GDP growth rate, lower would be loan loss provision to total loan. The result also shows that loan growth, inflation rate and interest rate are positively correlated to loan loss provision to non-performing loan. Also, this study reveals that capital adequacy ratio, non-performing loan, bank size and GDP growth rate are negatively correlated to loan loss provision to non-performing loan.
The regression result found beta coefficient of capital adequacy ratio is negative with loan loss provision to total loan and loan loss provision to non-performing loan which indicates that banks having higher capital adequacy ratio have lower loan loss provision to total loan and loan loss provision to non-performing loan. The beta coefficient is significant at 1 percent level of significance for loan loss provision to total loan and significant at 5 percent level of significance for loan loss provision to non-performing loan. The beta coefficient for loan growth is negative for loan loss provision to total loan and positive for loan loss provision to non-performing loan. The beta coefficient for loan growth is insignificant for both loan loss provision to total loan and loan loss provision to non-performing loan. The result found negative beta coefficient for the bank size with loan loss provision to total loan and loan loss provision to non-performing loan. The coefficient is significant at 5 percent level of significance for bank size with loan loss provision to total loan.
The result shows positive beta coefficient for non-performing loan with loan loss provision to total loan. However, beta coefficient for non-performing loan is negative with loan loss provision to non-performing loan. The beta coefficient for non-performing loan is significant at 1 percent level of significance. The beta coefficient for GDP growth rate is negative and insignificant for all proxy of loan loss provision i.e. loan loss provision to total loan and loan loss provision to non-performing loan which means that with an increase in GDP growth rate leads to decrease in loan loss provision. The positive beta coefficient is observed for inflation rate with loan loss provision to total loan and loan loss provision to non-performing loan which indicates that higher the inflation rate; higher would be loan loss provision to total loan and loan loss provision to non-performing loan. The beta coefficient is insignificant for inflation rate. The result found positive beta coefficient for the interest rate with loan loss provision to total loan and loan loss provision to non-performing loan. The coefficient is significant at 1 percent level of significance for interest rate with loan loss provision to non-performing loan and insignificant for loan loss provision to total loan.
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Barcode Call number Media type Location Section Status 470/D 332.12 BHU Books Uniglobe Library Social Sciences Available
Title : Determinants of non-performing loan in Nepalese commercial banks Material Type: printed text Authors: Seema Bhattari, Author Publication Date: 2013 Pagination: 113p. Size: GRP/Thesis Accompanying material: 2/B General note: Including bibliography
Languages : English Descriptors: Bank loans
Banks
Banks and banking
Commercial banks
Loans
Nepal
Non-performing loan
Seema BhattaraiKeywords: 'bank loans banks banks and banking commercial banks nepal loans seema bhattarai non-performing' Class number: 332.175 Abstract: The non-performing loans (NPL) of financial institutions are considered as a significant issue in the context of Nepal for last few decades. The immediate consequence of large amount of NPLs in the banking system is bank failure. Non-performing loans are one of the main reasons that cause insolvency of the financial institutions and ultimately hurt the whole economy. Studies show that the failure of banks in Nepal was also the result of the high non-performing assets due to and the result of lending without differentiating markets, products and borrowers’ credit worthiness and excessive loan exposure to real estate. However, there is not any study regarding the factors affecting non-performing loan in Nepal. Finding the factors affecting NPL covering both micro (banks specific) and macroeconomic variables may help to reduce the NPL and improve the profitability of each commercial banks and may also help for improvement of the economy as a whole.
In this context the study aims to identify the impact of macroeconomic variables (GDP, Inflation, and Real Effective Exchange Rate) and bank specific variables (size, change in loan, real lending rate of interest, and share of loan to total assets) on the non-performing loan of the commercial banks in Nepal. It further aims to identify the perception of bankers regarding the impact of bank specific variables and macroeconomic variables on non-performing loan in Nepalese Commercial Banks.
The study is conducted with primary as well as secondary sources. The secondary data are collected for 26 commercial banks covering the period of 2002-2012 with 227 observations. The primary data are collected from 140 bankers of ten top commercial banks of Nepal. It followed both qualitative and quantitative approach to analyze the findings of the study.
It is found that the government owned banks have the highest non-performing loan in all the years while the standard chartered bank has the lowest non-performing loan. However, newly established banks also have low non-performing loan. In terms of size, the government owned banks occupy the largest share while the share is low in the newly established banks like Citizens bank, Grand bank and Kist bank.
Macroeconomic variables such as the real effective exchange rate have significantly negative impact on non-performing loan which is inconsistent with the findings of previous studies. The impact of GDP growth rate is found to be insignificant in this study. One year lagged inflation rate has significant positive impact on non-performing loan. The banks which charge relatively higher real interest rate have higher non-performing loan, which is consistent with the findings of previous studies. If the bank is government owned bank the non-performing loan would be higher than that of the private owned banks since ownership dummy has positive coefficient and significant at one percent level. As well, more lending in the previous years and current year reduces the non-performing loan since the coefficient of change in loan in current and previous years have negative coefficient and significant at one percent level.
The bankers of Nepalese commercial bank perceive that energy crisis; lack of timely budgetary expenditure by the government and instable political environment increases the non-performing loan. Similarly bankers also perceive that borrowers honesty in disclosing the information, better monitoring and evaluation of the loan, increase in GDP growth rate have significantly negative impact on non-performing loan. However, the banker’s perception shows that the macroeconomic variables like unemployment rate, inflation rate, exchange rate and interest rate are not much important variables to influence non-performing loan of the commercial banks of Nepal. These findings of the study may add the literature on the area of determinants of non-performing loan within Nepalese Commercial banks in Nepal.
Determinants of non-performing loan in Nepalese commercial banks [printed text] / Seema Bhattari, Author . - 2013 . - 113p. ; GRP/Thesis + 2/B.
Including bibliography
Languages : English
Descriptors: Bank loans
Banks
Banks and banking
Commercial banks
Loans
Nepal
Non-performing loan
Seema BhattaraiKeywords: 'bank loans banks banks and banking commercial banks nepal loans seema bhattarai non-performing' Class number: 332.175 Abstract: The non-performing loans (NPL) of financial institutions are considered as a significant issue in the context of Nepal for last few decades. The immediate consequence of large amount of NPLs in the banking system is bank failure. Non-performing loans are one of the main reasons that cause insolvency of the financial institutions and ultimately hurt the whole economy. Studies show that the failure of banks in Nepal was also the result of the high non-performing assets due to and the result of lending without differentiating markets, products and borrowers’ credit worthiness and excessive loan exposure to real estate. However, there is not any study regarding the factors affecting non-performing loan in Nepal. Finding the factors affecting NPL covering both micro (banks specific) and macroeconomic variables may help to reduce the NPL and improve the profitability of each commercial banks and may also help for improvement of the economy as a whole.
In this context the study aims to identify the impact of macroeconomic variables (GDP, Inflation, and Real Effective Exchange Rate) and bank specific variables (size, change in loan, real lending rate of interest, and share of loan to total assets) on the non-performing loan of the commercial banks in Nepal. It further aims to identify the perception of bankers regarding the impact of bank specific variables and macroeconomic variables on non-performing loan in Nepalese Commercial Banks.
The study is conducted with primary as well as secondary sources. The secondary data are collected for 26 commercial banks covering the period of 2002-2012 with 227 observations. The primary data are collected from 140 bankers of ten top commercial banks of Nepal. It followed both qualitative and quantitative approach to analyze the findings of the study.
It is found that the government owned banks have the highest non-performing loan in all the years while the standard chartered bank has the lowest non-performing loan. However, newly established banks also have low non-performing loan. In terms of size, the government owned banks occupy the largest share while the share is low in the newly established banks like Citizens bank, Grand bank and Kist bank.
Macroeconomic variables such as the real effective exchange rate have significantly negative impact on non-performing loan which is inconsistent with the findings of previous studies. The impact of GDP growth rate is found to be insignificant in this study. One year lagged inflation rate has significant positive impact on non-performing loan. The banks which charge relatively higher real interest rate have higher non-performing loan, which is consistent with the findings of previous studies. If the bank is government owned bank the non-performing loan would be higher than that of the private owned banks since ownership dummy has positive coefficient and significant at one percent level. As well, more lending in the previous years and current year reduces the non-performing loan since the coefficient of change in loan in current and previous years have negative coefficient and significant at one percent level.
The bankers of Nepalese commercial bank perceive that energy crisis; lack of timely budgetary expenditure by the government and instable political environment increases the non-performing loan. Similarly bankers also perceive that borrowers honesty in disclosing the information, better monitoring and evaluation of the loan, increase in GDP growth rate have significantly negative impact on non-performing loan. However, the banker’s perception shows that the macroeconomic variables like unemployment rate, inflation rate, exchange rate and interest rate are not much important variables to influence non-performing loan of the commercial banks of Nepal. These findings of the study may add the literature on the area of determinants of non-performing loan within Nepalese Commercial banks in Nepal.
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Barcode Call number Media type Location Section Status 14/D 332.175 BHA Thesis/Dissertation Uniglobe Library Social Sciences Available
Title : Effect of interest rate on the performance of Nepalese commercial banks Material Type: printed text Authors: Sushmita Amatya, Author Publication Date: 2016 Pagination: 65p. Size: GRP/Thesis Accompanying material: 4/B General note: Including bibilography Languages : English Descriptors: Bank and banking
Bank loans
Interest rateKeywords: 'interest rate deposit rate inflation rate return on assets return on equity' Class number: 332.820 Abstract: Banks specialize in assessing the credit worthiness of borrowers and providing an ongoing monitoring function to ensure borrowers meet their obligations. Business and other financial institutions are in the market to settle day-to-day transactions (Vohra and Sehgal 2012). By almost any measure, the commercial bank is the most important financial intermediary serving the public today. They offer more services than the majority of other financial Institutions, which include expanding the money supply by granting credits (loans) to borrowers. Interest rate directly affects the lending of the any financial institutions (Felicia, 2011). Lending behavior of the bank can be defined as the preferences and choices of bank while making loans and advances. Bank lending behavior is the selection of bank’s investment on loans and advances on the account of constraints given by regulators, opportunities or threats provided by macroeconomic, factors and the preferences of customers (Musleh, 2007).
Nepalese economy is under the crucial transformation through changes in bothintersectoral importance and linkages. The composition of GDP has changed with servicesector emerging as nearly the largest sector, trade-GDP ratio has increased, and foreignexchange regime has been liberalized. banking sector is facing with the danger of liquidity crisis, inflated interest rate, declining deposits and the problem of the liquidity started which has affected the inter banking interest rate (Shrestha, 2011). In spite of higher interest rate provided by commercial bank in the deposits, it still fails to attract the depositors. growing competition in the financial sector, recent increase in transaction of security and capital markets as well as the taxation laid on higher deposits in banks are, among others, the factors affecting bank's profitability. The impact of market interest rates on commercial bank revenues, costs, and profitability has increasingly concerned economists and policymakers as financial market conditions have become more volatile in recent years (Shahi, 2008).
This study has aimed to examine effect of interest rate on banking performance in Nepalese commercial banks. Specifically, it examines the effect on bank rate, deposit rate, loan rate, inflation rate and non performing loan to return on assets and return on equity of commercial banks of Nepal. This study has used secondary sources of data to analyze the impact of interest rate structure on bank performance. The secondary sources of data have been used to investigate the relationship of interest rate and banking performance. The secondary data for bank performance and interest rate have been taken from annual report of the commercial bank for the year2009/10 to 2013/14. Total of 21 sample banks have been taken with 105 observations from the five year period. This study has used descriptive statistics, and correlation analysis, stepwise regressions have been carried out to examine the secondary data.
This result has found that return on assets is positively related to loan rate, bank rate, capital adequacy, and non performing loan while negatively related to deposit rate and the inflation. ROE is positively related with loan rate, capital adequacy and the inflation rate. While negative relation is observed with bank rate, deposit rate and non performing loan.Beta coefficient is positive for loan rate with return on assets (ROA) which indicates that increase in loan rate increases the return on assets.The beta coefficient for capital adequacy is positive with ROA indicating banks with higher capital adequacy can increases its return on assets, but it is not significant at five percent level.
The results also revealed that beta coefficient for deposit rate is negative with return on assets and is significant at five percent. This indicates that increases in deposit rate leads to decrease in return on assets.Beta coefficient is negative for bank rate with return on assets indicating increased bank rate decreases the return on assets of the banks.Result also revealed that beta coefficient is negative for non performing loan with return on assets and is significant at one and five percent level. This result reveals that if bank became able to decreases its volume of nonperforming loan, can increase bank performance as measured by return on assets (ROA).
The study concludes that bank can increase its profitability if bank can manage its interest rates. If bankisable to increase loan rate, bank can improve bank performance in the coming year. This study also concludes that non performing loan is also positively related to interest rate or loan rate in the bank. Nonperforming loan is also positively related to interest rate, higher interest rates may reduce the tendency to repay the loan because of the higher cost of loan, banks can reduce the interest amount from the customer so that they would be willing to repay the loan in time. This study suggests that banks willing to increase bank performance should properly assess the cause of decrease in return on assets, and should have remedies as earlier as possible.Effect of interest rate on the performance of Nepalese commercial banks [printed text] / Sushmita Amatya, Author . - 2016 . - 65p. ; GRP/Thesis + 4/B.
Including bibilography
Languages : English
Descriptors: Bank and banking
Bank loans
Interest rateKeywords: 'interest rate deposit rate inflation rate return on assets return on equity' Class number: 332.820 Abstract: Banks specialize in assessing the credit worthiness of borrowers and providing an ongoing monitoring function to ensure borrowers meet their obligations. Business and other financial institutions are in the market to settle day-to-day transactions (Vohra and Sehgal 2012). By almost any measure, the commercial bank is the most important financial intermediary serving the public today. They offer more services than the majority of other financial Institutions, which include expanding the money supply by granting credits (loans) to borrowers. Interest rate directly affects the lending of the any financial institutions (Felicia, 2011). Lending behavior of the bank can be defined as the preferences and choices of bank while making loans and advances. Bank lending behavior is the selection of bank’s investment on loans and advances on the account of constraints given by regulators, opportunities or threats provided by macroeconomic, factors and the preferences of customers (Musleh, 2007).
Nepalese economy is under the crucial transformation through changes in bothintersectoral importance and linkages. The composition of GDP has changed with servicesector emerging as nearly the largest sector, trade-GDP ratio has increased, and foreignexchange regime has been liberalized. banking sector is facing with the danger of liquidity crisis, inflated interest rate, declining deposits and the problem of the liquidity started which has affected the inter banking interest rate (Shrestha, 2011). In spite of higher interest rate provided by commercial bank in the deposits, it still fails to attract the depositors. growing competition in the financial sector, recent increase in transaction of security and capital markets as well as the taxation laid on higher deposits in banks are, among others, the factors affecting bank's profitability. The impact of market interest rates on commercial bank revenues, costs, and profitability has increasingly concerned economists and policymakers as financial market conditions have become more volatile in recent years (Shahi, 2008).
This study has aimed to examine effect of interest rate on banking performance in Nepalese commercial banks. Specifically, it examines the effect on bank rate, deposit rate, loan rate, inflation rate and non performing loan to return on assets and return on equity of commercial banks of Nepal. This study has used secondary sources of data to analyze the impact of interest rate structure on bank performance. The secondary sources of data have been used to investigate the relationship of interest rate and banking performance. The secondary data for bank performance and interest rate have been taken from annual report of the commercial bank for the year2009/10 to 2013/14. Total of 21 sample banks have been taken with 105 observations from the five year period. This study has used descriptive statistics, and correlation analysis, stepwise regressions have been carried out to examine the secondary data.
This result has found that return on assets is positively related to loan rate, bank rate, capital adequacy, and non performing loan while negatively related to deposit rate and the inflation. ROE is positively related with loan rate, capital adequacy and the inflation rate. While negative relation is observed with bank rate, deposit rate and non performing loan.Beta coefficient is positive for loan rate with return on assets (ROA) which indicates that increase in loan rate increases the return on assets.The beta coefficient for capital adequacy is positive with ROA indicating banks with higher capital adequacy can increases its return on assets, but it is not significant at five percent level.
The results also revealed that beta coefficient for deposit rate is negative with return on assets and is significant at five percent. This indicates that increases in deposit rate leads to decrease in return on assets.Beta coefficient is negative for bank rate with return on assets indicating increased bank rate decreases the return on assets of the banks.Result also revealed that beta coefficient is negative for non performing loan with return on assets and is significant at one and five percent level. This result reveals that if bank became able to decreases its volume of nonperforming loan, can increase bank performance as measured by return on assets (ROA).
The study concludes that bank can increase its profitability if bank can manage its interest rates. If bankisable to increase loan rate, bank can improve bank performance in the coming year. This study also concludes that non performing loan is also positively related to interest rate or loan rate in the bank. Nonperforming loan is also positively related to interest rate, higher interest rates may reduce the tendency to repay the loan because of the higher cost of loan, banks can reduce the interest amount from the customer so that they would be willing to repay the loan in time. This study suggests that banks willing to increase bank performance should properly assess the cause of decrease in return on assets, and should have remedies as earlier as possible.Hold
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Title : Factors affecting bank credit in Nepalese commercial banks Material Type: printed text Authors: Sandeep Kumar Shrestha, Author Publication Date: 2017 Pagination: 93p. Size: GRP/Thesis Accompanying material: 11/B Languages : English Descriptors: Bank loans Class number: 332.175 Abstract: Bank credit which may be on short, medium or long-term basis is one of the main services that bank provides to their customers. Bank credit plays one of the most important functions in assessing credit to different sectors of the economy. As a financial intermediary, bank accepts deposits from the public and creates credit. Lending activities of various commercial banks depends on the willingness to extend credit to different sectors of the economy. Thus, lending activities of bank help to achieve economic growth. Nwankwo (2000) stated that credit is the largest single income-earning asset in the portfolio of most commercial banks. The success of credit activities to a great extent lies on the part of the credit analysis to carry out good credit analysis, presentation, structuring and reporting.
The study attempts to examine the factors affecting bank credit in Nepalese commercial banks. The study is based on secondary data of 15 commercial banks with 135 observations for the period of 2007/08 to 2015/16. Data and information have been collected from banking and financial statistics and bank supervision published by NRB and annual report of selected commercial banks. The research design adopted in this study is descriptive and causal comparative research design as it deals with the factors affecting bank credit in Nepalese commercial banks.
The result shows that average loans and advances is highest for HBL (Rs. 52,378.67 million) and lowest for NCC (Rs. 17,621.50 million). The average toal loans to total assets is highest for HBL (0.88 times) and lowest for SCB (0.44 times). The average assets size is highest for NIBL (Rs. 74,084.08 million) and lowest for NCC (Rs. 19,877.03 million). The average total deposit to total assets ratio is highest for SRBL (0.90 times) and lowest for HBL (Rs. 0.64 times). The average total capital to total assets ratio is highest for NBBL (0.21 times) and lowest for MBL (0.88 times). The average of average interest rate on loan is highest for SRBL (10.85 percent) and lowest for SCB (6.69 percent). The average of cash reserve ratio is highest for SRBl (27.77 percent) and lowest for HBL (6.95 percent).
The descriptive statistics for selected commercial banks shows that the average loans and advances, total loans to total assets, total deposit to total assets ratio, total capital to total assets ratio, assets size, average interest rate on loan, cash reserve ratio, economic growth and inflation are Rs. 9.97 million, -0.45 times, -0.18 times, -2.33 times, Rs. 10.42 million, 2.22 percent, 2.37 percent, 1.26 percent and 2.27 percent.
The correlation matrix shows that total deposit to total assets ratio, total capital to total assets ratio and assets size are positively correlated to loans and advances. However, average interest rate on loan, cash reserve ratio, economic growth and inflation are negatively correlated to loans and advances. The result also states that total deposit to total assets ratio, total capital to total assets ratio, assets size and average interest rate on loan are positively correlated to total loans to total assets. However, cash reserve ratio, economic growth and inflation are negatively correlated to total loans to total assets.
The regression analysis reveals that assets size, total deposit to total assets ratio and total capital to total assets ratio have positive impact on loans and advances. This indicates that higher the assets size, total deposit to total assets ratio and total capital to total assets ratio, higher would be the loans and advances. However, economic growth, inflation, average interest rate on loan and cash reserve ratio have negative impact on loans and advances. This indicates that higher the economic growth, inflation, average interest rate on loan and cash reserve ratio, lower would be the loans and advances.
The study also shows that assets size, total deposit to total assets ratio, total capital to total assets ratio and average interest rate on loan have positive impact on total loans to total assets. This indicates that higher the assets size, total deposit to total assets ratio, total capital to total assets ratio and average interest rate on loan, lower would be the total loans to total assets. However, economic growth, inflation and cash reserve ratio have negative impact on total loans to total assets. This study reveals that assets size, total deposit to total assets ratio, average interest rate on loan, total capital to total assets ratio and cash reserve ratio are the major factors affecting bank credit in Nepalese commercial bank.
Factors affecting bank credit in Nepalese commercial banks [printed text] / Sandeep Kumar Shrestha, Author . - 2017 . - 93p. ; GRP/Thesis + 11/B.
Languages : English
Descriptors: Bank loans Class number: 332.175 Abstract: Bank credit which may be on short, medium or long-term basis is one of the main services that bank provides to their customers. Bank credit plays one of the most important functions in assessing credit to different sectors of the economy. As a financial intermediary, bank accepts deposits from the public and creates credit. Lending activities of various commercial banks depends on the willingness to extend credit to different sectors of the economy. Thus, lending activities of bank help to achieve economic growth. Nwankwo (2000) stated that credit is the largest single income-earning asset in the portfolio of most commercial banks. The success of credit activities to a great extent lies on the part of the credit analysis to carry out good credit analysis, presentation, structuring and reporting.
The study attempts to examine the factors affecting bank credit in Nepalese commercial banks. The study is based on secondary data of 15 commercial banks with 135 observations for the period of 2007/08 to 2015/16. Data and information have been collected from banking and financial statistics and bank supervision published by NRB and annual report of selected commercial banks. The research design adopted in this study is descriptive and causal comparative research design as it deals with the factors affecting bank credit in Nepalese commercial banks.
The result shows that average loans and advances is highest for HBL (Rs. 52,378.67 million) and lowest for NCC (Rs. 17,621.50 million). The average toal loans to total assets is highest for HBL (0.88 times) and lowest for SCB (0.44 times). The average assets size is highest for NIBL (Rs. 74,084.08 million) and lowest for NCC (Rs. 19,877.03 million). The average total deposit to total assets ratio is highest for SRBL (0.90 times) and lowest for HBL (Rs. 0.64 times). The average total capital to total assets ratio is highest for NBBL (0.21 times) and lowest for MBL (0.88 times). The average of average interest rate on loan is highest for SRBL (10.85 percent) and lowest for SCB (6.69 percent). The average of cash reserve ratio is highest for SRBl (27.77 percent) and lowest for HBL (6.95 percent).
The descriptive statistics for selected commercial banks shows that the average loans and advances, total loans to total assets, total deposit to total assets ratio, total capital to total assets ratio, assets size, average interest rate on loan, cash reserve ratio, economic growth and inflation are Rs. 9.97 million, -0.45 times, -0.18 times, -2.33 times, Rs. 10.42 million, 2.22 percent, 2.37 percent, 1.26 percent and 2.27 percent.
The correlation matrix shows that total deposit to total assets ratio, total capital to total assets ratio and assets size are positively correlated to loans and advances. However, average interest rate on loan, cash reserve ratio, economic growth and inflation are negatively correlated to loans and advances. The result also states that total deposit to total assets ratio, total capital to total assets ratio, assets size and average interest rate on loan are positively correlated to total loans to total assets. However, cash reserve ratio, economic growth and inflation are negatively correlated to total loans to total assets.
The regression analysis reveals that assets size, total deposit to total assets ratio and total capital to total assets ratio have positive impact on loans and advances. This indicates that higher the assets size, total deposit to total assets ratio and total capital to total assets ratio, higher would be the loans and advances. However, economic growth, inflation, average interest rate on loan and cash reserve ratio have negative impact on loans and advances. This indicates that higher the economic growth, inflation, average interest rate on loan and cash reserve ratio, lower would be the loans and advances.
The study also shows that assets size, total deposit to total assets ratio, total capital to total assets ratio and average interest rate on loan have positive impact on total loans to total assets. This indicates that higher the assets size, total deposit to total assets ratio, total capital to total assets ratio and average interest rate on loan, lower would be the total loans to total assets. However, economic growth, inflation and cash reserve ratio have negative impact on total loans to total assets. This study reveals that assets size, total deposit to total assets ratio, average interest rate on loan, total capital to total assets ratio and cash reserve ratio are the major factors affecting bank credit in Nepalese commercial bank.
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Barcode Call number Media type Location Section Status 406/D 332.175 SHR Thesis/Dissertation Uniglobe Library Social Sciences Available
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