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Refine your search Apply to external sourcesCapital structure and corporate performance: a case of Nepal / Kabindra Pokharel
Title : Capital structure and corporate performance: a case of Nepal Material Type: printed text Authors: Kabindra Pokharel, Author Publication Date: 2016 Pagination: 116P. Size: Books Accompanying material: 6/B Languages : English Descriptors: Capital structure Class number: 332.041 Abstract: During the last two decades the banking sector has experienced worldwide major transformations in its operating environment. Both external and domestic factors have affected its structure and performance. Recently banking institutions are facing the environment that is changing rapidly and competition is increasing at local as well as international level. As a result the risk in banking sector is increasing day by day. The choice of capital structure is crucial in the context of a bank. However, it is an essential element for the development of a healthy banking system in developing countries. The relationship between capital structure and performance are studied extensively in different period of time. In regards to the relationship between capital structure and profitability, different results are found. Some of the studies state that, there is a country where capital structure of banks affects positively to the profitability. Meanwhile, other studies indicate the nonlinear negative or positive relationship of capital structure and bank profitability.
Profitability is the major reason behind the existence of any business and same thing applies in the banking sector also. Banks are also guided by the profit maximization principle. Banks always look for the ways to increase their financial performance and minimize the risk associated with that increased performance. Hence, for that different activities are taken into consideration. To maximize the performance and minimize the risk a set of activities such as increasing the size or total assets, decreasing loan, increasing deposits, liquidity and capital are taken under their consideration. This study on capital structure and bank performance has been undertaken for Nepalese banks because Nepalese banking sector has gone through broad changes and is emerging as a major sector of the economy. Thus, this study aims to analyze the effect of capital structure and some bank specific variables on performance of Nepalese banks.
The results in the prior studies on capital structure and performance of banks are mixed and unclear. Hence, this study has been conducted to get clear idea of the capital structure and performance of Nepalese commercial banks. For this, the sample of 19 commercial banks with data of 7 years from 2008 to 2014 has been taken. Data has been collected from various secondary sources like annual reports of sample banks and consolidated financial reports prepared by Nepal Rastra Bank. Descriptive statistics, portfolio analysis, correlation analysis, and regressions have been carried out to examine the secondary data.
The performance measures like return on assets (ROA), earnings per share (EPS) and net interest margin (NIM) of the banks have been used as the dependent variable. Capital structure variables like total debt to total assets ratio, long term debt to total assets ratio and short term debt to total assets ratio. The bank specific variables like size and credit risk have been considered as independent variables.
Based on the results, total debt to total assets ratio, long term debt to total assets ratio and short term debt to total assets ratio in Nepal are important capital structure variable. Size and credit risk are bank specific variables in order of their relative importance that enhances the performance of the banks. To be more specific, total debt to total assets ratio, long term debt to total assets ratio and short term debt to total assets ratio are the independent variables that tend to influence the performance in negative manner. It implies that increase in any of these variables is likely to decrease the performance of the banks. However, independent variable size and credit risk has positive relation with performance. It reveals that bigger the company higher the performance in commercial banking industry.
The recommendation put forward by this study is that banks are suggested to decrease the proportion of debt in capital mix to have better performance but peaking order theory and tradeoff theory of capital structure should be analyzed. On the other hand, credit risk has positive effect with performance. So, it is recommended to have certain level of credit risk to increase the bank performance. The size has positive relation with performance variable shows that bigger organization has better performance. The major limitation of this study is that this study has excluded some bank macroeconomic variables that might influence on performance evaluation of banks. The study remains enough ground for future researcher in the same topic. The future studies can be carried out by selecting other financial institutions like development banks, public banks and finance companies to grab the wider view of banks performance evaluation.
Capital structure and corporate performance: a case of Nepal [printed text] / Kabindra Pokharel, Author . - 2016 . - 116P. ; Books + 6/B.
Languages : English
Descriptors: Capital structure Class number: 332.041 Abstract: During the last two decades the banking sector has experienced worldwide major transformations in its operating environment. Both external and domestic factors have affected its structure and performance. Recently banking institutions are facing the environment that is changing rapidly and competition is increasing at local as well as international level. As a result the risk in banking sector is increasing day by day. The choice of capital structure is crucial in the context of a bank. However, it is an essential element for the development of a healthy banking system in developing countries. The relationship between capital structure and performance are studied extensively in different period of time. In regards to the relationship between capital structure and profitability, different results are found. Some of the studies state that, there is a country where capital structure of banks affects positively to the profitability. Meanwhile, other studies indicate the nonlinear negative or positive relationship of capital structure and bank profitability.
Profitability is the major reason behind the existence of any business and same thing applies in the banking sector also. Banks are also guided by the profit maximization principle. Banks always look for the ways to increase their financial performance and minimize the risk associated with that increased performance. Hence, for that different activities are taken into consideration. To maximize the performance and minimize the risk a set of activities such as increasing the size or total assets, decreasing loan, increasing deposits, liquidity and capital are taken under their consideration. This study on capital structure and bank performance has been undertaken for Nepalese banks because Nepalese banking sector has gone through broad changes and is emerging as a major sector of the economy. Thus, this study aims to analyze the effect of capital structure and some bank specific variables on performance of Nepalese banks.
The results in the prior studies on capital structure and performance of banks are mixed and unclear. Hence, this study has been conducted to get clear idea of the capital structure and performance of Nepalese commercial banks. For this, the sample of 19 commercial banks with data of 7 years from 2008 to 2014 has been taken. Data has been collected from various secondary sources like annual reports of sample banks and consolidated financial reports prepared by Nepal Rastra Bank. Descriptive statistics, portfolio analysis, correlation analysis, and regressions have been carried out to examine the secondary data.
The performance measures like return on assets (ROA), earnings per share (EPS) and net interest margin (NIM) of the banks have been used as the dependent variable. Capital structure variables like total debt to total assets ratio, long term debt to total assets ratio and short term debt to total assets ratio. The bank specific variables like size and credit risk have been considered as independent variables.
Based on the results, total debt to total assets ratio, long term debt to total assets ratio and short term debt to total assets ratio in Nepal are important capital structure variable. Size and credit risk are bank specific variables in order of their relative importance that enhances the performance of the banks. To be more specific, total debt to total assets ratio, long term debt to total assets ratio and short term debt to total assets ratio are the independent variables that tend to influence the performance in negative manner. It implies that increase in any of these variables is likely to decrease the performance of the banks. However, independent variable size and credit risk has positive relation with performance. It reveals that bigger the company higher the performance in commercial banking industry.
The recommendation put forward by this study is that banks are suggested to decrease the proportion of debt in capital mix to have better performance but peaking order theory and tradeoff theory of capital structure should be analyzed. On the other hand, credit risk has positive effect with performance. So, it is recommended to have certain level of credit risk to increase the bank performance. The size has positive relation with performance variable shows that bigger organization has better performance. The major limitation of this study is that this study has excluded some bank macroeconomic variables that might influence on performance evaluation of banks. The study remains enough ground for future researcher in the same topic. The future studies can be carried out by selecting other financial institutions like development banks, public banks and finance companies to grab the wider view of banks performance evaluation.
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Barcode Call number Media type Location Section Status 171/D 332.041 POK Books Uniglobe Library Social Sciences Available
Title : Capital structure choice of commercial bank around South Asia: the role of country specific determinants with special reference to Nepal Material Type: printed text Authors: Arjun Gautam, Author Publication Date: 2016 Pagination: 96p. Size: GRP/Thesis Accompanying material: 6/B Languages : English Descriptors: Capital structure Class number: 658.152 Abstract: Researchers over the last decades believe that there is a relationship between macroeconomic condition of a country and capital structure choice of the firm. There are many studies published to examine this relationship. The relationship between macroeconomic condition of a country and capital structure choice of the firm are studied extensively by several researchers. In regards to the relationship between macroeconomic condition of a country and capital structure choice of the firm, researchers found different results. Some other the scholars’ stated that macroeconomic factors have negative relationship with capital structure choice of the firm. Meanwhile other researcher indicate that the nonlinear positive relationship between macroeconomic condition of a country and capital structure choice of the firm.
This study investigates the impact of country specific variables (macroeconomic) on capital structure choice of commercial banks of south Asian countries. The study has employed descriptive and causal comparative research design to deal with the fundamental issues associated with the impact of macroeconomic condition of a country on capital structure choice of the commercial banks in context of south Asian countries. The study is based on secondary data. The variables used in the study are categorized into country specific variables (inflation, ratio of stock market capitalization to GDP, GDP growth rate, discount rate on 91 days T-bill and ratio of quasi money supply to GDP) as independent variables and capital structure as dependent variables i.e. total debt ratio, long term debt ratio and short term debt ratio. Similarly this study covers data on dependent variables and independent variables for 13 years ranging for year 2001 to 2013.
The study reveals that macro-economic variable; inflation has negative relationship with total debt ratio of commercial banks of all four sample countries except commercial banks of Sri-Lanka. It means that as the inflation rate in a country increases the debt ratio of the commercial banks becomes weaker and vice versa. Similarly, the inflation has positive relation with long term debt ratio of commercial banks of Nepal and Pakistan but has negative relation with long term debt ratio of India, Sri-Lanka and Bhutan. For positive relation it advocates that as the inflation increases the long term leverage of the banks increases and vice versa. The GDP growth rate has negative relation with total debt ratio of commercial banks of all four sample countries except that of Pakistan, which means that when the country is economically developed, people prefer making investment in the various projects carried out by government as well as private sectors rather than depositing in banks for fixed period of time thus the long term debt ratio of commercial banks also decreases. The study revealed that ratio of quasi money supply (M2) has been found to be significant factor affecting the total debt ratio and short term debt ratio of Nepalese commercial bank. On the other hand none of macroeconomic factors are found to be significant factor affecting the long term debt ratio of Nepalese commercial bank. The study advocates that ratio of stock market capitalization and ratio of quasi money supply (M2) has been found to be significant factor affecting the total debt ratio of Indian commercial bank. Similarly, inflation, 91 days T-bill interest rate and ratio of quasi money supply to GDP are found to be significant factor affecting the long term debt ratio of Indian commercial bank. Whereas, only GDP growth rate has been found to be significant factor affecting the short term debt ratio of Indian commercial bank.
The study further reveals that GDP growth rate and ratio of market capitalization to GDP has been found to be significant factor affecting the total debt ratio, long term debt ratio and short term debt ratio of Sri-Lankan commercial bank. Inflation, GDP growth 91 days T-bill interest rate and ratio of quasi money supply (M2) has been found to be significant factor affecting the total debt ratio of Pakistani commercial bank. Whereas, none of the macroeconomic factors are found to be significant factor affecting the long term debt ratio. On the other hand inflation, 91 days T-bill interest rate and ratio of quasi money supply to GDP has been found to be significant factor affecting the short term debt ratio of Pakistani commercial bank. Ratio of quasi money supply (M2) has been found to be significant factor affecting the total debt ratio of Bhutanese commercial bank. Similarly, inflation, ratio of stock market capitalization to GDP and ratio of quasi money supply to GDP are found to be significant factor affecting the long term debt ratio of Bhutanese commercial bank. Whereas, only ratio of quasi money supply to GDP has been found to be significant factor affecting the short term debt ratio of Bhutanese commercial bank.
The study remains enough ground for the future researchers in the same topic. The future studies can be done by using both primary and secondary data so that along with country specific variables, firm specific factors can be used to get more precise result. In addition to commercial banks, the future study may include other financial and non financial sector such as development bank, finance companies, hotel and service industries, manufacturing industries, micro finance, insurance companies, hydro power companies etc to make such research work more reliable and valid. The results are thus not representative of all sectors of the economy. Hence, future studies can include significant number of observations from the sectors other than banks and financial institutions.
Capital structure choice of commercial bank around South Asia: the role of country specific determinants with special reference to Nepal [printed text] / Arjun Gautam, Author . - 2016 . - 96p. ; GRP/Thesis + 6/B.
Languages : English
Descriptors: Capital structure Class number: 658.152 Abstract: Researchers over the last decades believe that there is a relationship between macroeconomic condition of a country and capital structure choice of the firm. There are many studies published to examine this relationship. The relationship between macroeconomic condition of a country and capital structure choice of the firm are studied extensively by several researchers. In regards to the relationship between macroeconomic condition of a country and capital structure choice of the firm, researchers found different results. Some other the scholars’ stated that macroeconomic factors have negative relationship with capital structure choice of the firm. Meanwhile other researcher indicate that the nonlinear positive relationship between macroeconomic condition of a country and capital structure choice of the firm.
This study investigates the impact of country specific variables (macroeconomic) on capital structure choice of commercial banks of south Asian countries. The study has employed descriptive and causal comparative research design to deal with the fundamental issues associated with the impact of macroeconomic condition of a country on capital structure choice of the commercial banks in context of south Asian countries. The study is based on secondary data. The variables used in the study are categorized into country specific variables (inflation, ratio of stock market capitalization to GDP, GDP growth rate, discount rate on 91 days T-bill and ratio of quasi money supply to GDP) as independent variables and capital structure as dependent variables i.e. total debt ratio, long term debt ratio and short term debt ratio. Similarly this study covers data on dependent variables and independent variables for 13 years ranging for year 2001 to 2013.
The study reveals that macro-economic variable; inflation has negative relationship with total debt ratio of commercial banks of all four sample countries except commercial banks of Sri-Lanka. It means that as the inflation rate in a country increases the debt ratio of the commercial banks becomes weaker and vice versa. Similarly, the inflation has positive relation with long term debt ratio of commercial banks of Nepal and Pakistan but has negative relation with long term debt ratio of India, Sri-Lanka and Bhutan. For positive relation it advocates that as the inflation increases the long term leverage of the banks increases and vice versa. The GDP growth rate has negative relation with total debt ratio of commercial banks of all four sample countries except that of Pakistan, which means that when the country is economically developed, people prefer making investment in the various projects carried out by government as well as private sectors rather than depositing in banks for fixed period of time thus the long term debt ratio of commercial banks also decreases. The study revealed that ratio of quasi money supply (M2) has been found to be significant factor affecting the total debt ratio and short term debt ratio of Nepalese commercial bank. On the other hand none of macroeconomic factors are found to be significant factor affecting the long term debt ratio of Nepalese commercial bank. The study advocates that ratio of stock market capitalization and ratio of quasi money supply (M2) has been found to be significant factor affecting the total debt ratio of Indian commercial bank. Similarly, inflation, 91 days T-bill interest rate and ratio of quasi money supply to GDP are found to be significant factor affecting the long term debt ratio of Indian commercial bank. Whereas, only GDP growth rate has been found to be significant factor affecting the short term debt ratio of Indian commercial bank.
The study further reveals that GDP growth rate and ratio of market capitalization to GDP has been found to be significant factor affecting the total debt ratio, long term debt ratio and short term debt ratio of Sri-Lankan commercial bank. Inflation, GDP growth 91 days T-bill interest rate and ratio of quasi money supply (M2) has been found to be significant factor affecting the total debt ratio of Pakistani commercial bank. Whereas, none of the macroeconomic factors are found to be significant factor affecting the long term debt ratio. On the other hand inflation, 91 days T-bill interest rate and ratio of quasi money supply to GDP has been found to be significant factor affecting the short term debt ratio of Pakistani commercial bank. Ratio of quasi money supply (M2) has been found to be significant factor affecting the total debt ratio of Bhutanese commercial bank. Similarly, inflation, ratio of stock market capitalization to GDP and ratio of quasi money supply to GDP are found to be significant factor affecting the long term debt ratio of Bhutanese commercial bank. Whereas, only ratio of quasi money supply to GDP has been found to be significant factor affecting the short term debt ratio of Bhutanese commercial bank.
The study remains enough ground for the future researchers in the same topic. The future studies can be done by using both primary and secondary data so that along with country specific variables, firm specific factors can be used to get more precise result. In addition to commercial banks, the future study may include other financial and non financial sector such as development bank, finance companies, hotel and service industries, manufacturing industries, micro finance, insurance companies, hydro power companies etc to make such research work more reliable and valid. The results are thus not representative of all sectors of the economy. Hence, future studies can include significant number of observations from the sectors other than banks and financial institutions.
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Barcode Call number Media type Location Section Status 180/D 658.152 GAU Books Uniglobe Library Technology Available
Title : Determinants of capital structure: a case of Nepalese commercial banks Material Type: printed text Authors: Krishna Chalise, Author Publication Date: 2014 Pagination: 67p. Size: GRP/Thesis Accompanying material: 4/B General note: Including bibilography Languages : English Descriptors: Banks
Banks and banking
Capital management
Capital structureKeywords: 'capital structure return on assets return to equity bank bank and banking' Class number: 658.1522 Determinants of capital structure: a case of Nepalese commercial banks [printed text] / Krishna Chalise, Author . - 2014 . - 67p. ; GRP/Thesis + 4/B.
Including bibilography
Languages : English
Descriptors: Banks
Banks and banking
Capital management
Capital structureKeywords: 'capital structure return on assets return to equity bank bank and banking' Class number: 658.1522 Hold
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Barcode Call number Media type Location Section Status 72/D 658.1522 CHA Thesis/Dissertation Uniglobe Library Technology Available
Title : Determinants of capital structure: a comparative study of public banks, joint venture banks and private banks. Material Type: printed text Authors: Dipesh Raj Lamichhane, Author Publication Date: 2017 Pagination: 119p. Size: GRP/Thesis Accompanying material: 8/B Languages : English Descriptors: Capital structure Class number: 658.1522 Abstract: Capital structure is the composition of debt and equity of a company used to finance its assets. Companies which do not formally plan their capital structures are likely to have uneconomical and imbalanced capital structures and could face formidable difficulties in raising capital on favorable terms in long-run (Wippern, 1966). The capital structure of a firm is a mixture of different securities. In general, firms can choose among many alternative capital structures. The capital structure decision is the vital one since the financial performance of an enterprise is directly affected by such decision. In reality, establishing an optimal capital structure is a difficult task.
The study of capital structure attempts to explain the mix of securities and financing sources used by corporations to finance real investments (Myers, 1977). A firm can choose among many alternative capital structures. Rajan and Zingales (1995) found that the determinants of capital structure that have been reported for the U.S. (size, growth, profitability and tangible assets) are important in other countries as well. Therefore, it is important to test the relationship between bank specific variables and capital structure of the firm to make sound capital structure decisions. The study revealed that tax reserves and profitability have negative relationship with capital structure while size, growth opportunities and assets structure have positive relationship with capital structure (Sogorb, 2005). Likewise, Akhtar (2005) found that growth, profitability and size are found to be significant determinants of leverage. Gaud et al. (2005) revealed that size and assets structure are positively related to leverage while profitability and growth are found negatively related to leverage. Cespedes et al. (2010) carried out investigation on the capital structure and ownership in Latin America. The study concluded that leverage firms and ownership have a strong positive relationship. The study also showed that there is a positive relationship between growth and leverage but a negative relation exists between leverage and profitability. Similarly, Gajurel (2005) found that assets structure and size are positively related to leverage whereas liquidity, risk, growth, non-debt tax shield are negatively related to leverage. Likewise, Sharma et al. (2015) revealed that firm size and non-debt tax shield are positively related to leverage whereas return on assets, tangibility, capital expenditure and liquidity are negatively related to leverage.
The major objective of this study is to identify the determinants of capital structure in Nepalese commercial banks.The results are based on the secondary data and contain the sample of 22 commercial banks of Nepal during the period of 2009/10 to 2014/15. Out of total sampled banks, 3 banks are public, 5 banks are joint venture and 14 banks are private commercial banks. The data has been collected from the banking and financial statistics and bank supervision report published by Nepal Rastra Bank and annual reports of selected commercial banks. The research design adopted in this study is causal comparative type as it deals with the relationship between capital structure and profitability.
The result shows that SBI has highest debt equity ratio of 14.12 times, NBL has highest average debt asset ratio (103.83 percent) among the selected commercial banks over the study period. The study shows the increasing trend of TDE for private banks, joint venture banks and public banks. Similarly, it shows the decreasing trend of TDA for private banks, joint venture banks and public banks. Overall, the study shows that RBBL has highest total assets (Rs.105.57 in Billion), ADBL has highest average return on assets (3.03 percent), NMB has highest average tangibility (5.33 percent), SBL has highest average assets growth rate ratio (32.31 percent) and NMB has highest average liquidity (6.94 percent).
The descriptive statistics for public banks shows that the average total debt equity is -16.26 times, average total debt assets is 96.14 percent, average firm size is Rs.81.68 Billion, average return on assets is 2.05 percent, average tangibility is 1.10 percent, average assets growth rate is 11.54 percent and average liquidity is 1.56 percent. Similarly, the descriptive statistics for joint venture banks shows that the average total debt equity is 11.77 times, average total debt assets is 91.99 percent, average firm size is Rs. 60.25 Billion, average return on assets is 1.94 percent, average tangibility is 1.11 percent, average assets growth rate is 14.19 percent and average liquidity is 3.76 percent. Likewise, the descriptive statistics for private banks shows that average total debt equity is 9.66 times, average total debt assets is 89.31 percent, average firm size is Rs.31.84 Billion, average return on assets is 1.45 percent, average tangibility is 5.78 percent, average assets growth rate is 17.99 percent and average liquidity is 3.41 percent.
The correlation matrix for public banks reveals that firm size and tangibility are positively correlated to total debt equity while return on assets, assets growth rate and liquidity are negatively correlated to total debt equity. Firm size and tangibility are positively correlated to total debt assets while return on assets, assets growth rate and liquidity are negatively correlated to total debt assets. Similarly, the correlation matrix for joint venture banks reveals that firm size, tangibility and assets growth rate are positively correlated to total debt equity while return on assets and liquidity are negatively correlated to total debt equity. Firm size, tangibility and assets growth rate are positively correlated to total debt assets while return on assets and liquidity are negatively correlated to total debt assets. Likewise, correlation matrix for private banks reveals that firm size and tangibility are positively correlated to total debt equity while return on assets, assets growth rate and liquidity are negatively correlated to total debt equity. Firm size and tangibility are positively correlated to total debt assets while return on assets; assets growth rate and liquidity are negatively correlated to total debt assets.
The regression analysis reveals that firm size and tangibility have positive impact on total debt equity whereas return on assets, assets growth rate and liquidity have negative impact on total debt equity for public banks. Similarly, firm size, tangibility and assets growth rate have positive impact on total debt equity whereas return on assets and liquidity have negative impact on total debt equity for joint venture banks. Likewise, firm size has positive impact on total debt equity whereas return on assets, tangibility, assets growth rate and liquidity have negative impact on total debt equity for private banks. Moreover, firm size, tangibility and assets growth rate have positive impact on total debt assets whereas return on assets and liquidity have negative impact on total debt assets for public banks. Similarly, firm size and tangibility have positive impact on total debt assets whereas return on assets and assets growth rate have negative impact on total debt assets for joint venture banks. Likewise, firm size and tangibility have positive impact on total debt assets whereas return on assets, assets growth rate and liquidity have negative impact on total debt assets for private banks.
Determinants of capital structure: a comparative study of public banks, joint venture banks and private banks. [printed text] / Dipesh Raj Lamichhane, Author . - 2017 . - 119p. ; GRP/Thesis + 8/B.
Languages : English
Descriptors: Capital structure Class number: 658.1522 Abstract: Capital structure is the composition of debt and equity of a company used to finance its assets. Companies which do not formally plan their capital structures are likely to have uneconomical and imbalanced capital structures and could face formidable difficulties in raising capital on favorable terms in long-run (Wippern, 1966). The capital structure of a firm is a mixture of different securities. In general, firms can choose among many alternative capital structures. The capital structure decision is the vital one since the financial performance of an enterprise is directly affected by such decision. In reality, establishing an optimal capital structure is a difficult task.
The study of capital structure attempts to explain the mix of securities and financing sources used by corporations to finance real investments (Myers, 1977). A firm can choose among many alternative capital structures. Rajan and Zingales (1995) found that the determinants of capital structure that have been reported for the U.S. (size, growth, profitability and tangible assets) are important in other countries as well. Therefore, it is important to test the relationship between bank specific variables and capital structure of the firm to make sound capital structure decisions. The study revealed that tax reserves and profitability have negative relationship with capital structure while size, growth opportunities and assets structure have positive relationship with capital structure (Sogorb, 2005). Likewise, Akhtar (2005) found that growth, profitability and size are found to be significant determinants of leverage. Gaud et al. (2005) revealed that size and assets structure are positively related to leverage while profitability and growth are found negatively related to leverage. Cespedes et al. (2010) carried out investigation on the capital structure and ownership in Latin America. The study concluded that leverage firms and ownership have a strong positive relationship. The study also showed that there is a positive relationship between growth and leverage but a negative relation exists between leverage and profitability. Similarly, Gajurel (2005) found that assets structure and size are positively related to leverage whereas liquidity, risk, growth, non-debt tax shield are negatively related to leverage. Likewise, Sharma et al. (2015) revealed that firm size and non-debt tax shield are positively related to leverage whereas return on assets, tangibility, capital expenditure and liquidity are negatively related to leverage.
The major objective of this study is to identify the determinants of capital structure in Nepalese commercial banks.The results are based on the secondary data and contain the sample of 22 commercial banks of Nepal during the period of 2009/10 to 2014/15. Out of total sampled banks, 3 banks are public, 5 banks are joint venture and 14 banks are private commercial banks. The data has been collected from the banking and financial statistics and bank supervision report published by Nepal Rastra Bank and annual reports of selected commercial banks. The research design adopted in this study is causal comparative type as it deals with the relationship between capital structure and profitability.
The result shows that SBI has highest debt equity ratio of 14.12 times, NBL has highest average debt asset ratio (103.83 percent) among the selected commercial banks over the study period. The study shows the increasing trend of TDE for private banks, joint venture banks and public banks. Similarly, it shows the decreasing trend of TDA for private banks, joint venture banks and public banks. Overall, the study shows that RBBL has highest total assets (Rs.105.57 in Billion), ADBL has highest average return on assets (3.03 percent), NMB has highest average tangibility (5.33 percent), SBL has highest average assets growth rate ratio (32.31 percent) and NMB has highest average liquidity (6.94 percent).
The descriptive statistics for public banks shows that the average total debt equity is -16.26 times, average total debt assets is 96.14 percent, average firm size is Rs.81.68 Billion, average return on assets is 2.05 percent, average tangibility is 1.10 percent, average assets growth rate is 11.54 percent and average liquidity is 1.56 percent. Similarly, the descriptive statistics for joint venture banks shows that the average total debt equity is 11.77 times, average total debt assets is 91.99 percent, average firm size is Rs. 60.25 Billion, average return on assets is 1.94 percent, average tangibility is 1.11 percent, average assets growth rate is 14.19 percent and average liquidity is 3.76 percent. Likewise, the descriptive statistics for private banks shows that average total debt equity is 9.66 times, average total debt assets is 89.31 percent, average firm size is Rs.31.84 Billion, average return on assets is 1.45 percent, average tangibility is 5.78 percent, average assets growth rate is 17.99 percent and average liquidity is 3.41 percent.
The correlation matrix for public banks reveals that firm size and tangibility are positively correlated to total debt equity while return on assets, assets growth rate and liquidity are negatively correlated to total debt equity. Firm size and tangibility are positively correlated to total debt assets while return on assets, assets growth rate and liquidity are negatively correlated to total debt assets. Similarly, the correlation matrix for joint venture banks reveals that firm size, tangibility and assets growth rate are positively correlated to total debt equity while return on assets and liquidity are negatively correlated to total debt equity. Firm size, tangibility and assets growth rate are positively correlated to total debt assets while return on assets and liquidity are negatively correlated to total debt assets. Likewise, correlation matrix for private banks reveals that firm size and tangibility are positively correlated to total debt equity while return on assets, assets growth rate and liquidity are negatively correlated to total debt equity. Firm size and tangibility are positively correlated to total debt assets while return on assets; assets growth rate and liquidity are negatively correlated to total debt assets.
The regression analysis reveals that firm size and tangibility have positive impact on total debt equity whereas return on assets, assets growth rate and liquidity have negative impact on total debt equity for public banks. Similarly, firm size, tangibility and assets growth rate have positive impact on total debt equity whereas return on assets and liquidity have negative impact on total debt equity for joint venture banks. Likewise, firm size has positive impact on total debt equity whereas return on assets, tangibility, assets growth rate and liquidity have negative impact on total debt equity for private banks. Moreover, firm size, tangibility and assets growth rate have positive impact on total debt assets whereas return on assets and liquidity have negative impact on total debt assets for public banks. Similarly, firm size and tangibility have positive impact on total debt assets whereas return on assets and assets growth rate have negative impact on total debt assets for joint venture banks. Likewise, firm size and tangibility have positive impact on total debt assets whereas return on assets, assets growth rate and liquidity have negative impact on total debt assets for private banks.
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Barcode Call number Media type Location Section Status 341/B 658.1522 LAM Thesis/Dissertation Uniglobe Library Technology Available
Title : Determinants of capital structure in selected Nepalese bank Material Type: printed text Authors: Subin Shrestha, Author Publication Date: 2013 Pagination: 87p. Size: GRP/Thesis Accompanying material: 1/B General note: Including bibliography Languages : English Descriptors: Banks
Banks and banking
Capital management
Capital structure
Commercial banks
NepalKeywords: 'capital management capital structure banks banks and banking commercial banks nepal Class number: 658.152 Abstract: The capital structure decision is crucial for any business organization. The decision is important because of the need to maximize returns to various organizational constituencies, and also because of the impact such a decision has on a firm’s ability to deal with its competitive environment (Mayers S.C., 1984). The capital structure of a firm is actually a mix of different securities. In general, a firm can choose among many alternative capital structures. It can issue a large amount of debt or very little debt. It can arrange lease financing, use warrants, issue convertible bonds, sign forward contracts or trade bond swaps. It can issue dozens of distinct securities in countless combinations; however, it attempts to find the particular combination that maximizes its overall market value.The main objective of this study is to analyze the determinants of capital structure adopted by the Nepalese bank. The specific objectives are to find out the major determinants of capital structure of banks in Nepal, to examine the relationship between financial leverage and size of the company, profitability, asset structure and level of economic growth, to analyze the variation of capital structure mix across different banks, to study the views of Managers and Executives regarding the determinants of capital structure.
The review of literature shows the sophisticated and the most contentious theories of capital structure were developed. Empirical studies took turn to the cross-sectional characteristics of individual firm’s capital structure particularly in fundamental determinants of financial structure during the period of 1970’s. After the development of agency cost and asymmetric information models of capital structure theory, most the empirical studies carried out after 1970’s are based on either agency cost model or an asymmetric information model. Finally, on the basis of the review of empirical works done so far, it can be concluded that the theories of capital structure are still not immunized against the dispute on what factors would guide the management to determine the proper capitals structure of the firms. In this study, some specific factors that determine the capital structure of Nepalese firms are examined.
The study is based on pooled data of 12 sample banks, the study sample period is from 2001 to 2012. This study employed regression analysis, correlation analysis, and portfolio analysis to explain variation in capital structure. Besides, the study also used descriptive statistics to analyze the views of the financial executives, which mainly focus on the qualitative part of the major expected return in the Nepalese stock market. The primary data have been collected through the questionnaire distributed to the senior branch manager, branch managers, management trainee, and junior officer of 12 sample banks.
The study also concluded that, on one way sorting of portfolio analysis, there exist a positive relationship between profitability and financial leverage. Similarly, the relationship between size and financial leverage is also positive, this indicates that as the profitability and size increases the financial leverage also increases. Further, the one way sorting of portfolio analysis by asset structure and level of economic growth also found to be positively related with financial leverage. In multiple regression analysis, profitability and asset structure found to be significant factor affecting financial leverage. whereas, size and level of economic growth do not have any power in explaining financial leverage ratio. The overall model is significant at 5% level of significance. The adjusted R square 0.68, indicates that 68% of variation are captured by the independent variables (profitability, size, asset structure, and level of economic growth).
The capital structure of banks is, however, still a relatively under-explored area in the banking literature. Currently, there is no clear understanding on how banks choose their capital structure and what factors influence their corporate financing behavior. This study focuses on profitability, size , asset structure and level of economic growth. It is assumed that this study is probably the new concept to do research and compare and critically analyzed findings and conclusions as to previous study which were undertaken in developed countries. It is very much required to study in the context of Nepal, whether the profitability, size, asset structure and level of economic growth explains the variation on financial leverage.
Determinants of capital structure in selected Nepalese bank [printed text] / Subin Shrestha, Author . - 2013 . - 87p. ; GRP/Thesis + 1/B.
Including bibliography
Languages : English
Descriptors: Banks
Banks and banking
Capital management
Capital structure
Commercial banks
NepalKeywords: 'capital management capital structure banks banks and banking commercial banks nepal Class number: 658.152 Abstract: The capital structure decision is crucial for any business organization. The decision is important because of the need to maximize returns to various organizational constituencies, and also because of the impact such a decision has on a firm’s ability to deal with its competitive environment (Mayers S.C., 1984). The capital structure of a firm is actually a mix of different securities. In general, a firm can choose among many alternative capital structures. It can issue a large amount of debt or very little debt. It can arrange lease financing, use warrants, issue convertible bonds, sign forward contracts or trade bond swaps. It can issue dozens of distinct securities in countless combinations; however, it attempts to find the particular combination that maximizes its overall market value.The main objective of this study is to analyze the determinants of capital structure adopted by the Nepalese bank. The specific objectives are to find out the major determinants of capital structure of banks in Nepal, to examine the relationship between financial leverage and size of the company, profitability, asset structure and level of economic growth, to analyze the variation of capital structure mix across different banks, to study the views of Managers and Executives regarding the determinants of capital structure.
The review of literature shows the sophisticated and the most contentious theories of capital structure were developed. Empirical studies took turn to the cross-sectional characteristics of individual firm’s capital structure particularly in fundamental determinants of financial structure during the period of 1970’s. After the development of agency cost and asymmetric information models of capital structure theory, most the empirical studies carried out after 1970’s are based on either agency cost model or an asymmetric information model. Finally, on the basis of the review of empirical works done so far, it can be concluded that the theories of capital structure are still not immunized against the dispute on what factors would guide the management to determine the proper capitals structure of the firms. In this study, some specific factors that determine the capital structure of Nepalese firms are examined.
The study is based on pooled data of 12 sample banks, the study sample period is from 2001 to 2012. This study employed regression analysis, correlation analysis, and portfolio analysis to explain variation in capital structure. Besides, the study also used descriptive statistics to analyze the views of the financial executives, which mainly focus on the qualitative part of the major expected return in the Nepalese stock market. The primary data have been collected through the questionnaire distributed to the senior branch manager, branch managers, management trainee, and junior officer of 12 sample banks.
The study also concluded that, on one way sorting of portfolio analysis, there exist a positive relationship between profitability and financial leverage. Similarly, the relationship between size and financial leverage is also positive, this indicates that as the profitability and size increases the financial leverage also increases. Further, the one way sorting of portfolio analysis by asset structure and level of economic growth also found to be positively related with financial leverage. In multiple regression analysis, profitability and asset structure found to be significant factor affecting financial leverage. whereas, size and level of economic growth do not have any power in explaining financial leverage ratio. The overall model is significant at 5% level of significance. The adjusted R square 0.68, indicates that 68% of variation are captured by the independent variables (profitability, size, asset structure, and level of economic growth).
The capital structure of banks is, however, still a relatively under-explored area in the banking literature. Currently, there is no clear understanding on how banks choose their capital structure and what factors influence their corporate financing behavior. This study focuses on profitability, size , asset structure and level of economic growth. It is assumed that this study is probably the new concept to do research and compare and critically analyzed findings and conclusions as to previous study which were undertaken in developed countries. It is very much required to study in the context of Nepal, whether the profitability, size, asset structure and level of economic growth explains the variation on financial leverage.
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Barcode Call number Media type Location Section Status 10/D 658.152 SHR Thesis/Dissertation Uniglobe Library Technology Available
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