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Title : Determinants of capital adequacy of Nepalese commercial banks Material Type: printed text Authors: Manisha Baral, Author Publication Date: 2016 Pagination: 79p. Size: GRP/Thesis Accompanying material: 4/B General note: Including bibilography Languages : English Descriptors: Banks
Banks and banking
Capital adequacy
Commercial banksKeywords: capital adequacy bank capital financial performance' Class number: 332.120 Determinants of capital adequacy of Nepalese commercial banks [printed text] / Manisha Baral, Author . - 2016 . - 79p. ; GRP/Thesis + 4/B.
Including bibilography
Languages : English
Descriptors: Banks
Banks and banking
Capital adequacy
Commercial banksKeywords: capital adequacy bank capital financial performance' Class number: 332.120 Hold
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Barcode Call number Media type Location Section Status 156/D 332.120 BAR Thesis/Dissertation Uniglobe Library Social Sciences Available
Title : Determinants of credit risk and capital adequacy: a comparative study of Nepalese public, joint venture and private banks Material Type: printed text Authors: Sadikshya Thapa, Author Publication Date: 2016 Pagination: 136p. Size: GRP/Thesis Accompanying material: 8/B Languages : English Descriptors: Capital adequacy Class number: 332.1206 Abstract: Financial sector is the backbone of the economy of a country. It works as a facilitator for achieving sustained economic growth through efficient monetary intermediation. Financial systems perform the essential economic function of channeling funds from units who have saved surplus funds to units who have a shortage of funds. Likewise, capital adequacy has long been regarded as an important parameter from a financial economics viewpoint since it is linked with a firm’s ability to meet the demands of various stakeholders and its decision is amongst the major issues in business firms. The credit rating companies assess the capital adequacy and strategic planning in a firm in order to determine the credit worthiness. Therefore, the assessment on capital adequacy and credit risk is important because of its importance to profitability, long term sustenance and economic growth. Different models have been developed to explain the determinants of credit risk and capital adequacy. There is an accepted norm in finance that bank specific variables and macroeconomic variables explain the behavior of capital adequacy and credit risk.
Most of the empirical work investigates the determinants of credit risk and capital adequacy with bank specific variables and macroeconomic variables mostly in the developed economy. However such studies are lacking in the developing economy. Therefore, this study tries to investigate the relationship between the profitability and stock return with bank specific variables and macroeconomic variables evidence from Nepalese commercial banks.
The major objective of the study is to examine the determinants of credit risk and capital adequacy in the context of Nepalese private, public and joint venture commercial banks. The study is based on the secondary data of 20 Nepalese commercial banks for the period of 2007/08 to 2014/15 with a total of 160 observations. The main source of data include 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 bank specific and macroeconomic factors on profitability and stock return of Nepalese commercial banks.
The analysis of credit risk indicates that the percentage of credit risk is highest for NBB (10.19 percent) and lowest for EBL (0.59 percent). It has been found that credit risk has decreased in the majority of the selected commercial banks during the study period. NMB has highest average total capital ratio (17.21 percent) and RBBL has lowest total capital ratio (-15.27) percent). When the capital is compared over a period of time for individual banks, it is noticed that capital has increased in majority of the selected commercial banks in recent years. The average return on asset is highest for NBB (5.45 percent) and lowest for MBL (0.60 percent). It has been found that return on asset has increased in the majority of the selected commercial banks during the study period.
The descriptive analysis for joint venture banks shows that mean CR and CAP of selected commercial banks are 3.07 percent and 11.06 percent respectively. The descriptive analysis for private domestic bank shows that mean CR and CAP of selected commercial banks are 1.81 percent and 12.58 percent respectively. The descriptive analysis for public sector banks shows that mean CR and CAP of selected commercial banks are 8.10 percent and -2.07 percent respectively.
The study reveals that bank size and capital adequacy are negatively correlated to credit of public, private and joint venture banks. This indicates that higher the bank size and capital adequacy, lower would be the credit risk. However, assets quality is also positively related to credit risk. Similarly, bank size is positively related to capital adequacy in the case of joint venture banks, whereas it is negative for public and private banks. Likewise, GDP growth is positively related to capital adequacy in the case of private domestic banks. However, inflation is positively related to credit risk and capital adequacy in the case of joint venture banks, whereas it is negative for public and private banks.
The results of the regression analysis show that there is positive and significant impact of assets quality on CR for private domestic banks, whereas there is negative and significant impact of management efficiency on CR. Similarly, in case of public banks, there is positive impact of capital adequacy and credit growth on CR. The results revealed that there is positive impact of tangibility on CAP for joint venture and public sector banks. However, there is negative and significant impact of return on assets and bank size on CAP. Similarly, the study reveals that there is positive and significant impact of liquidity on CAP for private domestic banks. Thus, this study concludes that assets quality and bank size are the major determinants of banks’ credit risk, whereas tangibility is the major determinant of banks’ capital adequacy.
Determinants of credit risk and capital adequacy: a comparative study of Nepalese public, joint venture and private banks [printed text] / Sadikshya Thapa, Author . - 2016 . - 136p. ; GRP/Thesis + 8/B.
Languages : English
Descriptors: Capital adequacy Class number: 332.1206 Abstract: Financial sector is the backbone of the economy of a country. It works as a facilitator for achieving sustained economic growth through efficient monetary intermediation. Financial systems perform the essential economic function of channeling funds from units who have saved surplus funds to units who have a shortage of funds. Likewise, capital adequacy has long been regarded as an important parameter from a financial economics viewpoint since it is linked with a firm’s ability to meet the demands of various stakeholders and its decision is amongst the major issues in business firms. The credit rating companies assess the capital adequacy and strategic planning in a firm in order to determine the credit worthiness. Therefore, the assessment on capital adequacy and credit risk is important because of its importance to profitability, long term sustenance and economic growth. Different models have been developed to explain the determinants of credit risk and capital adequacy. There is an accepted norm in finance that bank specific variables and macroeconomic variables explain the behavior of capital adequacy and credit risk.
Most of the empirical work investigates the determinants of credit risk and capital adequacy with bank specific variables and macroeconomic variables mostly in the developed economy. However such studies are lacking in the developing economy. Therefore, this study tries to investigate the relationship between the profitability and stock return with bank specific variables and macroeconomic variables evidence from Nepalese commercial banks.
The major objective of the study is to examine the determinants of credit risk and capital adequacy in the context of Nepalese private, public and joint venture commercial banks. The study is based on the secondary data of 20 Nepalese commercial banks for the period of 2007/08 to 2014/15 with a total of 160 observations. The main source of data include 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 bank specific and macroeconomic factors on profitability and stock return of Nepalese commercial banks.
The analysis of credit risk indicates that the percentage of credit risk is highest for NBB (10.19 percent) and lowest for EBL (0.59 percent). It has been found that credit risk has decreased in the majority of the selected commercial banks during the study period. NMB has highest average total capital ratio (17.21 percent) and RBBL has lowest total capital ratio (-15.27) percent). When the capital is compared over a period of time for individual banks, it is noticed that capital has increased in majority of the selected commercial banks in recent years. The average return on asset is highest for NBB (5.45 percent) and lowest for MBL (0.60 percent). It has been found that return on asset has increased in the majority of the selected commercial banks during the study period.
The descriptive analysis for joint venture banks shows that mean CR and CAP of selected commercial banks are 3.07 percent and 11.06 percent respectively. The descriptive analysis for private domestic bank shows that mean CR and CAP of selected commercial banks are 1.81 percent and 12.58 percent respectively. The descriptive analysis for public sector banks shows that mean CR and CAP of selected commercial banks are 8.10 percent and -2.07 percent respectively.
The study reveals that bank size and capital adequacy are negatively correlated to credit of public, private and joint venture banks. This indicates that higher the bank size and capital adequacy, lower would be the credit risk. However, assets quality is also positively related to credit risk. Similarly, bank size is positively related to capital adequacy in the case of joint venture banks, whereas it is negative for public and private banks. Likewise, GDP growth is positively related to capital adequacy in the case of private domestic banks. However, inflation is positively related to credit risk and capital adequacy in the case of joint venture banks, whereas it is negative for public and private banks.
The results of the regression analysis show that there is positive and significant impact of assets quality on CR for private domestic banks, whereas there is negative and significant impact of management efficiency on CR. Similarly, in case of public banks, there is positive impact of capital adequacy and credit growth on CR. The results revealed that there is positive impact of tangibility on CAP for joint venture and public sector banks. However, there is negative and significant impact of return on assets and bank size on CAP. Similarly, the study reveals that there is positive and significant impact of liquidity on CAP for private domestic banks. Thus, this study concludes that assets quality and bank size are the major determinants of banks’ credit risk, whereas tangibility is the major determinant of banks’ capital adequacy.
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Barcode Call number Media type Location Section Status 270/D 332.1206 THA Thesis/Dissertation Uniglobe Library Social Sciences Available
Title : Effect of credit risk and capital adequacy on profitability of Nepalese commercial banks Material Type: printed text Authors: Asmita Budhathoki, Author Publication Date: 2017 Pagination: 99p. Size: GRP/Thesis Accompanying material: 11/B Languages : English Descriptors: Capital adequacy
Credit riskKeywords: 'capital adequacy capital adequacy bank capital financial performance' Class number: 332.120 Abstract: The economic development and prosperity come from the well-developed and perfect banking system. Strong banking system plays important role in efficient allocation and utilization of credit. Credit risk is the current and prospective risk to earnings or capital arising from an obligor’s failure to meet the terms of any contract with the banks or otherwise to perform as agreed. 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).
This study attempts to analyze the effect of credit risk and capital adequacy on profitability of Nepalese commercial banks. This study is based on the secondary data of 16 commercial banks of Nepal for the time period of 2007/08 to 2015/16, leading to a total of 144 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 credit risk and capital adequacy with the profitability of Nepalese commercial banks.
The result reveals that average return on assets is highest for NBBL (5.62 percent) and lowest for SUNBL (0.88 percent). The average earnings per share is highest for NABIL (Rs. 83.21 per share) and lowest for MBL (Rs. 10.87 per share). The average loan loss provision ratio is highest for ADBL (14.19 times) and lowest for SCBL (1.49 times). The average capital adequacy is highest for ADBL (16.35 percent) and lowest for MBL (10.74 percent). The average leverage ratio is highest for EBL (12.78 times) and lowest for ADBL (6.28 times). The average non-performing loan ratio is highest for NBBL (9.47 percent) and lowest for SCBL (0.61 percent). The average credit to deposit ratio is highest for ADBL (105.50 percent) and lowest for SCBL (50.86 percent). NABIL has the highest average bank size (Rs.86.22 billion) and KBL has the lowest (Rs. 25.81 billion). Annual inflation rate is highest in the year 2009/10 (12.6 percent) and lowest in the year 2007/08 (6.7 percent). Annual GDP growth rate is highest in the year 2007/08 (6.10 percent) and lowest in the year 2015/16 (0.77 percent). The descriptive statistics for selected commercial bank shows that the average return on assets ratio is 1.89 percent, average earning per share is Rs. 38.16 per share, average loan loss provision is 3.71times, average capital adequacy ratio is 12.21percent, average non-performing loan ratio is 2.41 percent, average leverage ratio is 9.88 percent, average credit to deposit ratio is 78.58 percent, average bank size is Rs 43.79 billion, average inflation is 9.18 percent and average GDP growth is 4.13 percent.
The study shows that the capital adequacy ratio is positively related to return on assets (ROA) and earnings per share (EPS). It indicates that increase in capital adequacy ratio leads to increase in ROA and EPS. The study also shows that bank size and inflation are positively related to ROA and EPS. It indicates that higher the bank size and inflation, higher would be the ROA and EPS of Nepalese commercial banks. However, the result shows that loan loss provision and non-performing loan have a negative relationship with ROA and EPS. This indicates that increase in loan loss provision and non-performing loan leads to decrease in ROA and EPS. Likewise, the study reveals that leverage, credit to deposit ratio, and GDP are negatively related to the ROA and EPS. This indicates that increase in leverage, credit to deposit ratio, and GDP leads to decrease in ROA and EPS. The regression results also show that beta coefficients are positive for leverage, bank size and GDP for ROA and EPS whereas beta coefficients are negative for non-performing loans and credit to deposit ratio. However, the coefficients are significant only for bank size at 5 percent level.
Effect of credit risk and capital adequacy on profitability of Nepalese commercial banks [printed text] / Asmita Budhathoki, Author . - 2017 . - 99p. ; GRP/Thesis + 11/B.
Languages : English
Descriptors: Capital adequacy
Credit riskKeywords: 'capital adequacy capital adequacy bank capital financial performance' Class number: 332.120 Abstract: The economic development and prosperity come from the well-developed and perfect banking system. Strong banking system plays important role in efficient allocation and utilization of credit. Credit risk is the current and prospective risk to earnings or capital arising from an obligor’s failure to meet the terms of any contract with the banks or otherwise to perform as agreed. 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).
This study attempts to analyze the effect of credit risk and capital adequacy on profitability of Nepalese commercial banks. This study is based on the secondary data of 16 commercial banks of Nepal for the time period of 2007/08 to 2015/16, leading to a total of 144 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 credit risk and capital adequacy with the profitability of Nepalese commercial banks.
The result reveals that average return on assets is highest for NBBL (5.62 percent) and lowest for SUNBL (0.88 percent). The average earnings per share is highest for NABIL (Rs. 83.21 per share) and lowest for MBL (Rs. 10.87 per share). The average loan loss provision ratio is highest for ADBL (14.19 times) and lowest for SCBL (1.49 times). The average capital adequacy is highest for ADBL (16.35 percent) and lowest for MBL (10.74 percent). The average leverage ratio is highest for EBL (12.78 times) and lowest for ADBL (6.28 times). The average non-performing loan ratio is highest for NBBL (9.47 percent) and lowest for SCBL (0.61 percent). The average credit to deposit ratio is highest for ADBL (105.50 percent) and lowest for SCBL (50.86 percent). NABIL has the highest average bank size (Rs.86.22 billion) and KBL has the lowest (Rs. 25.81 billion). Annual inflation rate is highest in the year 2009/10 (12.6 percent) and lowest in the year 2007/08 (6.7 percent). Annual GDP growth rate is highest in the year 2007/08 (6.10 percent) and lowest in the year 2015/16 (0.77 percent). The descriptive statistics for selected commercial bank shows that the average return on assets ratio is 1.89 percent, average earning per share is Rs. 38.16 per share, average loan loss provision is 3.71times, average capital adequacy ratio is 12.21percent, average non-performing loan ratio is 2.41 percent, average leverage ratio is 9.88 percent, average credit to deposit ratio is 78.58 percent, average bank size is Rs 43.79 billion, average inflation is 9.18 percent and average GDP growth is 4.13 percent.
The study shows that the capital adequacy ratio is positively related to return on assets (ROA) and earnings per share (EPS). It indicates that increase in capital adequacy ratio leads to increase in ROA and EPS. The study also shows that bank size and inflation are positively related to ROA and EPS. It indicates that higher the bank size and inflation, higher would be the ROA and EPS of Nepalese commercial banks. However, the result shows that loan loss provision and non-performing loan have a negative relationship with ROA and EPS. This indicates that increase in loan loss provision and non-performing loan leads to decrease in ROA and EPS. Likewise, the study reveals that leverage, credit to deposit ratio, and GDP are negatively related to the ROA and EPS. This indicates that increase in leverage, credit to deposit ratio, and GDP leads to decrease in ROA and EPS. The regression results also show that beta coefficients are positive for leverage, bank size and GDP for ROA and EPS whereas beta coefficients are negative for non-performing loans and credit to deposit ratio. However, the coefficients are significant only for bank size at 5 percent level.
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Barcode Call number Media type Location Section Status 407/D 332.120 BUD Thesis/Dissertation Uniglobe Library Social Sciences Available
Title : Effect of the capital adequacy requirements on liquidity of Nepalese commercial banks Material Type: printed text Authors: Anjana Kumari Chaudhary, Author Publication Date: 2017 Pagination: 101p. Size: GRP/Thesis Accompanying material: 11/B Languages : English Descriptors: Capital adequacy Keywords: capital adequacy bank capital financial performance' Class number: 332.120 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.
Higher capital improves banks’ ability to create liquidity. Liquidity creation exposes banks to risk, the more liquidity is created, the greater are the likelihood and severity of losses associated with having to dispose of illiquid assets to meet the liquidity demands of customers (Diamond and Dybvig 1983). Recent contributions suggest that bank capital may impede this liquidity creation process because bank capital diminishes the financial fragility that facilitates the liquidity creation process (Diamond and Rajan, 2000, 2001). According to the theory of financial intermediation, an important role of banks in the economy is to provide liquidity by funding long-term, illiquid assets with short-term, liquid liabilities. Through this function, banks create liquidity as they hold illiquid assets and provide cash and demand deposits to the rest of the economy.
This study attempts to explore the effect of capital adequacy requirements on liquidity of selected commercial banks in context of Nepal. This study is based on the secondary data for 16 commercial banks with 144 observations for the period of 2007/08 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, leverage ratio, deposits, equity to total assets, bank size and total debt to total assets ratio on liquidity of Nepalese commercial banks.
The result shows that average loan to deposit ratio is highest for CBIL (2.90 percent) and lowest for SUBL (83.80 percent). The average liquid assets to total deposit ratio is highest for NMBBL (78.93 rupees) and lowest for HBL (9.74 rupees). The average capital adequacy ratio is highest for NMBBL (16.86 percent) and lowest for NIBL (10.38 percent). Similarly, leverage ratio is highest for EBL (13.75 percent) and lowest for NBBL (6.82 percent). The average deposits is highest for NABIL (Rs.63.77 billion) and lowest for CBILRs.16.75 billion). Likewise, average equity to total assets ratio is highest for SUBL (11.62 percent) and lowest forEBL (7.93 percent). The average bank size is highest for NIBL (RS.129.78 billion) and lowest for NCCBL (RS.30.23billion) and average total debt to total assets ratio is highest for EBL (92.52 percent) and lowest for NBBL (87.06 percent).
The descriptive statistics for selected commercial bank shows that the average loan to deposit ratio, liquid assets to total deposit ratio, capital adequacy ratio, leverage ratio, deposits, equity to total assets ratio, bank size and total debt to total assets are77.47 percent, 19.08 rupees, 12.10 percent, 10.21 percent, Rs.34.35 billion, 9.20 percent, Rs.39.59 billion and 90.59 percent.
The study shows that the capital adequacy and equity to total assets ratio are positively related to a loan to deposit ratio and liquid assets to total deposits ratio. It indicates that increase in capital adequacy and equity to total assets ratio leads to increase in loan to deposit ratio and liquid assets to total deposits ratio. However, the result shows that leverage, deposits ratio, size and total debt to total assets ratio have a negative relationship with loan to deposit ratio and liquid assets to total deposits ratio. This indicates that increase leverage, deposits ratio, size and total debt to total assets ratio leads to decrease in loan to deposit ratio and liquid assets to total deposits ratio. The regression results also show that beta coefficients are positive for capital adequacy and equity to total assets ratio for loan to deposit ratio and liquid assets to total deposits ratio whereas beta coefficients are negative for leverage, deposits ratio, size and total debt to total assets ratio. However, coefficients are significant only for leverage and deposits ratio at 5 percent level of significance.
Effect of the capital adequacy requirements on liquidity of Nepalese commercial banks [printed text] / Anjana Kumari Chaudhary, Author . - 2017 . - 101p. ; GRP/Thesis + 11/B.
Languages : English
Descriptors: Capital adequacy Keywords: capital adequacy bank capital financial performance' Class number: 332.120 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.
Higher capital improves banks’ ability to create liquidity. Liquidity creation exposes banks to risk, the more liquidity is created, the greater are the likelihood and severity of losses associated with having to dispose of illiquid assets to meet the liquidity demands of customers (Diamond and Dybvig 1983). Recent contributions suggest that bank capital may impede this liquidity creation process because bank capital diminishes the financial fragility that facilitates the liquidity creation process (Diamond and Rajan, 2000, 2001). According to the theory of financial intermediation, an important role of banks in the economy is to provide liquidity by funding long-term, illiquid assets with short-term, liquid liabilities. Through this function, banks create liquidity as they hold illiquid assets and provide cash and demand deposits to the rest of the economy.
This study attempts to explore the effect of capital adequacy requirements on liquidity of selected commercial banks in context of Nepal. This study is based on the secondary data for 16 commercial banks with 144 observations for the period of 2007/08 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, leverage ratio, deposits, equity to total assets, bank size and total debt to total assets ratio on liquidity of Nepalese commercial banks.
The result shows that average loan to deposit ratio is highest for CBIL (2.90 percent) and lowest for SUBL (83.80 percent). The average liquid assets to total deposit ratio is highest for NMBBL (78.93 rupees) and lowest for HBL (9.74 rupees). The average capital adequacy ratio is highest for NMBBL (16.86 percent) and lowest for NIBL (10.38 percent). Similarly, leverage ratio is highest for EBL (13.75 percent) and lowest for NBBL (6.82 percent). The average deposits is highest for NABIL (Rs.63.77 billion) and lowest for CBILRs.16.75 billion). Likewise, average equity to total assets ratio is highest for SUBL (11.62 percent) and lowest forEBL (7.93 percent). The average bank size is highest for NIBL (RS.129.78 billion) and lowest for NCCBL (RS.30.23billion) and average total debt to total assets ratio is highest for EBL (92.52 percent) and lowest for NBBL (87.06 percent).
The descriptive statistics for selected commercial bank shows that the average loan to deposit ratio, liquid assets to total deposit ratio, capital adequacy ratio, leverage ratio, deposits, equity to total assets ratio, bank size and total debt to total assets are77.47 percent, 19.08 rupees, 12.10 percent, 10.21 percent, Rs.34.35 billion, 9.20 percent, Rs.39.59 billion and 90.59 percent.
The study shows that the capital adequacy and equity to total assets ratio are positively related to a loan to deposit ratio and liquid assets to total deposits ratio. It indicates that increase in capital adequacy and equity to total assets ratio leads to increase in loan to deposit ratio and liquid assets to total deposits ratio. However, the result shows that leverage, deposits ratio, size and total debt to total assets ratio have a negative relationship with loan to deposit ratio and liquid assets to total deposits ratio. This indicates that increase leverage, deposits ratio, size and total debt to total assets ratio leads to decrease in loan to deposit ratio and liquid assets to total deposits ratio. The regression results also show that beta coefficients are positive for capital adequacy and equity to total assets ratio for loan to deposit ratio and liquid assets to total deposits ratio whereas beta coefficients are negative for leverage, deposits ratio, size and total debt to total assets ratio. However, coefficients are significant only for leverage and deposits ratio at 5 percent level of significance.
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Barcode Call number Media type Location Section Status 399/D 332.120 CHA Books Uniglobe Library Social Sciences Available
Title : Effects of bank capital adequacy on profitability and risk Nepalese commercial banks Material Type: printed text Authors: Sulochana Rijal, Author Publication Date: 2016 Pagination: 99p. Size: GRP/Thesis Accompanying material: 6/B Languages : English Descriptors: Capital adequacy Class number: 332.120 Abstract: Banking sector plays an important role in economic development of the country. The aim of the bank regulation is to increase prudential practices that will reduce the level of risk that banks are exposed to. Banking regulation is for the interest of depositors. In general capital regulation is very important because it plays an important role in banks' profit and risk taking behavior, as well as it impacts on competitiveness of banks (Dahl, 1992). Bank capital and risk positioning are simultaneously determined and are affected by both exogenous and endogenous factors. In general, management tends to balance increases in capital with increases in risk, but these tradeoffs are affected by regulatory pressure. Kwan & Eisenbeis (1996) indicate that there is significant relationship of bank capital with profitability and risk.
The major purpose of this study is to identify the firm-specific and macroeconomic effects of bank capital adequacy on profitability and risk of Nepalese commercial banks. The study has the following specific objectives is to analyze the structure and pattern on return on assets, return on equity and loan loss provision, to analyze the impact of capital adequacy ratio, liquidity, deposit to total assets and loan to total assets on the profitability, to evaluate the effect of deposit to total assets and loan to total assets on risk and to evaluate the impact of GDP and inflation on profitability and risk.
This study based on the secondary sources of data which were gather for a sample of 18 commercial banks of Nepal within the time period from 2007/08 to 2013/14, leading to the total of 126 observations. The secondary data have been obtained from Nepal Rastra Bank Bulletin published by central bank of Nepal, annual reports of the selected commercial banks. The research design adopted in this study is causal comparative types as it deals with relationship of bank specific factors like capital adequacy ratio, liquidity, deposit to total assets and loan to total assets and macroeconomic variables GDP and inflation with dependent variable such as return on assets, return on equity and loan loss provision. The statistical methods used in the analysis are descriptive statistics, correlation analysis and regression analysis.
The result shows that capital adequacy, loan to total assets, deposit to total assets and GDP are positively related to return on assets. This indicates that higher the capital adequacy, loan to total assets, deposit to total assets and GDP, higher would be return on assets. Likewise, Capital adequacy ratio, loan to total assets, deposit to total assets and GDP are positively related to return on equity indicating that higher the capital adequacy, loan to total assets, deposit to total assets and GDP, higher would be return on equity. However, liquidity and inflation are negatively related to ROA and ROE. This indicates that higher the liquidity in the banks, lower would be return on equity and return on assets. However, liquidity, capital adequacy ratio, loan to total assets, deposits to total assets, GDP and inflation are positively related to loan loss provision. This indicates that higher the liquidity, capital adequacy, loan to total assets, deposit to total assets, GDP and inflation, higher would be loan loss provision. The beta coefficient is positive for capital adequacy ratio, loan to total assets ratio, deposit to total assets and GDP with return on assets and return on equity whereas the beta coefficient is negative for liquidity and inflation with return on assets and return on equity. Likewise, the beta coefficient for capital adequacy ratio, loan to total assets, deposit to total assets, liquidity, inflation and GDP are positively related with loan loss provision. The beta coefficient is significant at 5 percent level of significance.
The major conclusion of the study is that higher the capital adequacy ratio, higher would be return on assets and return on equity of banks. Similarly, higher the deposit to total assets, higher would be return on assets and return on equity. The study also concludes that increase in loan to total assets rate leads to increase in loan loss provision.
Effects of bank capital adequacy on profitability and risk Nepalese commercial banks [printed text] / Sulochana Rijal, Author . - 2016 . - 99p. ; GRP/Thesis + 6/B.
Languages : English
Descriptors: Capital adequacy Class number: 332.120 Abstract: Banking sector plays an important role in economic development of the country. The aim of the bank regulation is to increase prudential practices that will reduce the level of risk that banks are exposed to. Banking regulation is for the interest of depositors. In general capital regulation is very important because it plays an important role in banks' profit and risk taking behavior, as well as it impacts on competitiveness of banks (Dahl, 1992). Bank capital and risk positioning are simultaneously determined and are affected by both exogenous and endogenous factors. In general, management tends to balance increases in capital with increases in risk, but these tradeoffs are affected by regulatory pressure. Kwan & Eisenbeis (1996) indicate that there is significant relationship of bank capital with profitability and risk.
The major purpose of this study is to identify the firm-specific and macroeconomic effects of bank capital adequacy on profitability and risk of Nepalese commercial banks. The study has the following specific objectives is to analyze the structure and pattern on return on assets, return on equity and loan loss provision, to analyze the impact of capital adequacy ratio, liquidity, deposit to total assets and loan to total assets on the profitability, to evaluate the effect of deposit to total assets and loan to total assets on risk and to evaluate the impact of GDP and inflation on profitability and risk.
This study based on the secondary sources of data which were gather for a sample of 18 commercial banks of Nepal within the time period from 2007/08 to 2013/14, leading to the total of 126 observations. The secondary data have been obtained from Nepal Rastra Bank Bulletin published by central bank of Nepal, annual reports of the selected commercial banks. The research design adopted in this study is causal comparative types as it deals with relationship of bank specific factors like capital adequacy ratio, liquidity, deposit to total assets and loan to total assets and macroeconomic variables GDP and inflation with dependent variable such as return on assets, return on equity and loan loss provision. The statistical methods used in the analysis are descriptive statistics, correlation analysis and regression analysis.
The result shows that capital adequacy, loan to total assets, deposit to total assets and GDP are positively related to return on assets. This indicates that higher the capital adequacy, loan to total assets, deposit to total assets and GDP, higher would be return on assets. Likewise, Capital adequacy ratio, loan to total assets, deposit to total assets and GDP are positively related to return on equity indicating that higher the capital adequacy, loan to total assets, deposit to total assets and GDP, higher would be return on equity. However, liquidity and inflation are negatively related to ROA and ROE. This indicates that higher the liquidity in the banks, lower would be return on equity and return on assets. However, liquidity, capital adequacy ratio, loan to total assets, deposits to total assets, GDP and inflation are positively related to loan loss provision. This indicates that higher the liquidity, capital adequacy, loan to total assets, deposit to total assets, GDP and inflation, higher would be loan loss provision. The beta coefficient is positive for capital adequacy ratio, loan to total assets ratio, deposit to total assets and GDP with return on assets and return on equity whereas the beta coefficient is negative for liquidity and inflation with return on assets and return on equity. Likewise, the beta coefficient for capital adequacy ratio, loan to total assets, deposit to total assets, liquidity, inflation and GDP are positively related with loan loss provision. The beta coefficient is significant at 5 percent level of significance.
The major conclusion of the study is that higher the capital adequacy ratio, higher would be return on assets and return on equity of banks. Similarly, higher the deposit to total assets, higher would be return on assets and return on equity. The study also concludes that increase in loan to total assets rate leads to increase in loan loss provision.
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Barcode Call number Media type Location Section Status 208/D 332.120 RIJ Books Uniglobe Library Social Sciences Available
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