Determinants of banks profitability in Nepal / Navin Kumar Mahatha 

Public ISBD Title : Determinants of banks profitability in Nepal Material Type: printed text Authors: Navin Kumar Mahatha, Author Publication Date: 2017 Size: GRP/Thesis Accompanying material: 8/B Languages : English Descriptors: Bank profits Class number: 338.709 Abstract: Commercial banks play an important role for economic development and foster economic growth by providing number of financial services. One of the important functions of the commercial banks is the financial intermediation functions and thus it transfers the fund from surplus units to the deficit units. It accepts deposits and provides loan and advances to the needed people, institutions and investors. It also invests in several short term and long term projects. Thus, financial sector development plays vital role for appropriate functioning of whole economy. The banks and financial institutions are special components of a healthy and wealthy financial system of the country (Alam et al., 2011). It receives money from those who want to save in the form of deposits and it lends money to those who need it. Banking sector plays the significant role in overall development of the economy in all countries, thus it is said that the banking sector mirrors the larger economy (Singh &Dutta, 2013). Banks motivate people to keep their surplus money as deposits in the bank then bank utilize that money by providing loan to these people who have deficit and need of that fund or by investing that fund in other profitable sector (Selgin, 1988). In the Nepalese financial system, commercial banks are the major mobilizer and disbursers of financial resources. They have all pervasive roles in the growth of a developing country like Nepal. The role of banks in accelerating the economic development of a country like Nepal has been increasingly recognized. They are specially called upon to use their resources to attain social upliftment and speedier economic development (Rai, 2004). Financial sector is regarded as one of the major areas of the economy that plays a vital role in developing nation. A strong financial system promotes investment by financial productive business opportunities, mobilizing savings, efficiently allocating resources and makes easy the trade of goods and services. In Nepal several commercial banks entered in to the business after liberalization in 1989, deregulation advancement in information technology and globalization. Since then financial institutions were free to enter the market. The development in financial sector and bank performance is of great concern in today’s competitive banking industry. Banking Sector development have been a regular feature in the Nepalese financial system, conducted mainly to improve the performance of commercial banks on the one hand and to improve the effectiveness and efficiency of the banking system and the economy in general.The major objective of the study is to analyze the determinants of profitability of commercial banks in Nepal. The specific objectives are as follows:a) to evaluate whether the change in number of bank has significant impact on the ROE and NIM of the commercial banks,b) to evaluate whether the change in interest rate spread of the bank has significant impact on the profitability of the commercial banks. c)to examine the impact of real GDP per capita growth on bank performance, d) To evaluate whether the stock market capitalization to GDP ratio has significant impact on the profitability of the commercial banks. The major purpose of this study is to examine the explanatory power of internal and external variables on performance of Nepalese commercial banks. Specifically, bank competition, GDP growth rate, market interest rate, relative size of the bank, stock market capitalization, cash reserve ratio, bank capital, bank loan and inflation rate on performance of Nepalese commercial banks. The study is based on the secondary data of 21 Nepalese commercial banks for the period of 2009/10 to 2013/14 with a total of 126 observations. The main source of data includes various issues of Banking and Financial Statistics, Quarterly Economic Bulletin and Bank Supervision Report published by Nepal Rastra Bank and annual reports of the 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 impact of financial sector development variables on Nepalese commercial banks. The result shows that number of the bank (bank competition), relative size of the bank, stock market capitalization, bank capital and cash reserve ratio are the major factors of that affects the bank performance on Nepalese commercial banks. The result reveals that stock market capitalization have positive relation with bank profitability. This indicates that increase in stock market capitalization leads to increase in profitability of the banks. The results also show that numbers of banks have negative relationship with return on equity, which indicates that more the banks are in the market, lower would be the return on equity. Similarly, bank capital has positive relationship with net interest margin, which indicates that higher the bank capital, higher would be the net interest margin. The regression results show that inflation rate have positive and significant beta coefficient for net interest margin. Likewise, results show that cash reserve ratios have positive and significant relationship with net interest margin. However, relative size of the bank has negative impact on return on equity, this indicates that increase in relative size of the bank leads to decrease in return on equity. Likewise, cash reserve ratio has negative impact on return on equity. Determinants of banks profitability in Nepal [printed text] / Navin Kumar Mahatha, Author . - 2017 . -  ; GRP/Thesis + 8/B. Languages : English Descriptors: Bank profits Class number: 338.709 Abstract: Commercial banks play an important role for economic development and foster economic growth by providing number of financial services. One of the important functions of the commercial banks is the financial intermediation functions and thus it transfers the fund from surplus units to the deficit units. It accepts deposits and provides loan and advances to the needed people, institutions and investors. It also invests in several short term and long term projects. Thus, financial sector development plays vital role for appropriate functioning of whole economy. The banks and financial institutions are special components of a healthy and wealthy financial system of the country (Alam et al., 2011). It receives money from those who want to save in the form of deposits and it lends money to those who need it. Banking sector plays the significant role in overall development of the economy in all countries, thus it is said that the banking sector mirrors the larger economy (Singh &Dutta, 2013). Banks motivate people to keep their surplus money as deposits in the bank then bank utilize that money by providing loan to these people who have deficit and need of that fund or by investing that fund in other profitable sector (Selgin, 1988). In the Nepalese financial system, commercial banks are the major mobilizer and disbursers of financial resources. They have all pervasive roles in the growth of a developing country like Nepal. The role of banks in accelerating the economic development of a country like Nepal has been increasingly recognized. They are specially called upon to use their resources to attain social upliftment and speedier economic development (Rai, 2004). Financial sector is regarded as one of the major areas of the economy that plays a vital role in developing nation. A strong financial system promotes investment by financial productive business opportunities, mobilizing savings, efficiently allocating resources and makes easy the trade of goods and services. In Nepal several commercial banks entered in to the business after liberalization in 1989, deregulation advancement in information technology and globalization. Since then financial institutions were free to enter the market. The development in financial sector and bank performance is of great concern in today’s competitive banking industry. Banking Sector development have been a regular feature in the Nepalese financial system, conducted mainly to improve the performance of commercial banks on the one hand and to improve the effectiveness and efficiency of the banking system and the economy in general.The major objective of the study is to analyze the determinants of profitability of commercial banks in Nepal. The specific objectives are as follows:a) to evaluate whether the change in number of bank has significant impact on the ROE and NIM of the commercial banks,b) to evaluate whether the change in interest rate spread of the bank has significant impact on the profitability of the commercial banks. c)to examine the impact of real GDP per capita growth on bank performance, d) To evaluate whether the stock market capitalization to GDP ratio has significant impact on the profitability of the commercial banks. The major purpose of this study is to examine the explanatory power of internal and external variables on performance of Nepalese commercial banks. Specifically, bank competition, GDP growth rate, market interest rate, relative size of the bank, stock market capitalization, cash reserve ratio, bank capital, bank loan and inflation rate on performance of Nepalese commercial banks. The study is based on the secondary data of 21 Nepalese commercial banks for the period of 2009/10 to 2013/14 with a total of 126 observations. The main source of data includes various issues of Banking and Financial Statistics, Quarterly Economic Bulletin and Bank Supervision Report published by Nepal Rastra Bank and annual reports of the 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 impact of financial sector development variables on Nepalese commercial banks. The result shows that number of the bank (bank competition), relative size of the bank, stock market capitalization, bank capital and cash reserve ratio are the major factors of that affects the bank performance on Nepalese commercial banks. The result reveals that stock market capitalization have positive relation with bank profitability. This indicates that increase in stock market capitalization leads to increase in profitability of the banks. The results also show that numbers of banks have negative relationship with return on equity, which indicates that more the banks are in the market, lower would be the return on equity. Similarly, bank capital has positive relationship with net interest margin, which indicates that higher the bank capital, higher would be the net interest margin. The regression results show that inflation rate have positive and significant beta coefficient for net interest margin. Likewise, results show that cash reserve ratios have positive and significant relationship with net interest margin. However, relative size of the bank has negative impact on return on equity, this indicates that increase in relative size of the bank leads to decrease in return on equity. Likewise, cash reserve ratio has negative impact on return on equity.

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Determinants of profitability of commercial banks in Nepal / Sangeeta Shrestha 

Public ISBD Title : Determinants of profitability of commercial banks in Nepal Material Type: printed text Authors: Sangeeta Shrestha, Author Publication Date: 2013 Pagination: 92p. Size: GRP/Thesis Accompanying material: 1/B General note: Including bibliography Languages : English Descriptors: Bank profits Banks and banking Commercial banks Nepal Profit Keywords: 'profitability  profits  banks  banks and banking  commercial banks  nepal  sangeeta shrestha  profit' Class number: 338.709 Determinants of profitability of commercial banks in Nepal [printed text] / Sangeeta Shrestha, Author . - 2013 . - 92p. ; GRP/Thesis + 1/B. Including bibliography Languages : English Descriptors: Bank profits Banks and banking Commercial banks Nepal Profit Keywords: 'profitability  profits  banks  banks and banking  commercial banks  nepal  sangeeta shrestha  profit' Class number: 338.709

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Effect of assets quality on the profitability of Nepalese commercial banks / Pravek Joshi 

Public ISBD Title : Effect of assets quality on the profitability of Nepalese commercial banks Material Type: printed text Authors: Pravek Joshi, Author Publication Date: 2017 Pagination: 99p. Size: GRP/Thesis Accompanying material: 8/B Languages : English Descriptors: Bank and banking Bank profits Class number: 332.1 Abstract: Commercial banks play an important role for economic development and foster economic growth by providing number of financial services. One of the important functions of the commercial banks is the financial intermediation functions and thus it transfers the fund from surplus units to the deficit units. It accepts deposits and provides loan and advances to the needed people, institutions and investors. Asset quality is known as the loan quality and has been defined as the overall risk attached to the various assets held by an individual or institution. It is most commonly used by banks to determine how many of their assets are at financial risk and how much allowance for potential losses they must make. The most common assets requiring a strict determination of asset quality are loans, which can be non-performing assets if borrowers default on repayment obligations. Risk managers often assess the quality of assets by assigning a numerical ranking to each asset depending upon how much risk is involved (Ombaba, 2013). The main objectives of the study are to figure out the effect of non-performing assets on the profitability of Nepalese commercial banks.This study is based on the commercial banks of Nepal. For the study purpose out of 29 commercial banks in Nepal 19 commercial banks has been selected. Data are collected for the time period of 2007/08 to 2014/15 leading to a total of 152 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 relationship between assets quality and profitability of Nepalese commercial banks. The result shows that NBBL has highest average ROA, and EBL has the highest average EPS among the selected commercial banks throughout the study period.Similarly, the average NPA is highest for NBB (10.54 percent), average bank size is highest for RBBL, average capital adequacy ratio is highest for NMB (18.36 percent), average interest rate spread is highest for NBL (6.94percent) and average bank operating is highest for NSBI (10.17 percent). The descriptive statistics for the Nepalese commercial banks reveals that the average return on assets, return on equity, non-performing assets,bank size, capital adequacy ratio, spread rate, bank operating expenses inflation rate and GDP is 1.92 percent, 39.02rupees, 3.33percent, 10.51 billion rupees times, 10.01 percent, 4.54 percent, 3.64 percent, 8.94 percent and is 4.58 percent respectively. The study found that non-performing assets, bank operating expenses, and inflation have negative relationship with return on assets. The results also show that capital adequacy ratio, bank size, spread rate and GDP is positively related to the return on assets. On the other hand, results also show that NPA, capital adequacy ratio, bank operating expenses and inflation is negatively related with earnings per share. However, the results show that bank size, spread rate and GDP have positive relationship with earnings per share. The regression results show that NPA and BOE have negative and significant impact on return on assets. However, results show that CAR and spread rate have positive and significant impact on ROA of Nepalese commercial banks. Likewise, results show that beta coefficients are positive and significant for bank size and spread rate on EPS for Nepalese commercial banks. The regression results show bank operating expenses have negative and significant impact on EPS of Nepalese commercial banks. The result reveals that non-performing assets, spread rate and bank operating expenses are major determining variables in terms of ROA. The result reveals that dividend bank size, spread rate and bank operating expenses are major determining variables in terms of EPS. Effect of assets quality on the profitability of Nepalese commercial banks [printed text] / Pravek Joshi, Author . - 2017 . - 99p. ; GRP/Thesis + 8/B. Languages : English Descriptors: Bank and banking Bank profits Class number: 332.1 Abstract: Commercial banks play an important role for economic development and foster economic growth by providing number of financial services. One of the important functions of the commercial banks is the financial intermediation functions and thus it transfers the fund from surplus units to the deficit units. It accepts deposits and provides loan and advances to the needed people, institutions and investors. Asset quality is known as the loan quality and has been defined as the overall risk attached to the various assets held by an individual or institution. It is most commonly used by banks to determine how many of their assets are at financial risk and how much allowance for potential losses they must make. The most common assets requiring a strict determination of asset quality are loans, which can be non-performing assets if borrowers default on repayment obligations. Risk managers often assess the quality of assets by assigning a numerical ranking to each asset depending upon how much risk is involved (Ombaba, 2013). The main objectives of the study are to figure out the effect of non-performing assets on the profitability of Nepalese commercial banks.This study is based on the commercial banks of Nepal. For the study purpose out of 29 commercial banks in Nepal 19 commercial banks has been selected. Data are collected for the time period of 2007/08 to 2014/15 leading to a total of 152 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 relationship between assets quality and profitability of Nepalese commercial banks. The result shows that NBBL has highest average ROA, and EBL has the highest average EPS among the selected commercial banks throughout the study period.Similarly, the average NPA is highest for NBB (10.54 percent), average bank size is highest for RBBL, average capital adequacy ratio is highest for NMB (18.36 percent), average interest rate spread is highest for NBL (6.94percent) and average bank operating is highest for NSBI (10.17 percent). The descriptive statistics for the Nepalese commercial banks reveals that the average return on assets, return on equity, non-performing assets,bank size, capital adequacy ratio, spread rate, bank operating expenses inflation rate and GDP is 1.92 percent, 39.02rupees, 3.33percent, 10.51 billion rupees times, 10.01 percent, 4.54 percent, 3.64 percent, 8.94 percent and is 4.58 percent respectively. The study found that non-performing assets, bank operating expenses, and inflation have negative relationship with return on assets. The results also show that capital adequacy ratio, bank size, spread rate and GDP is positively related to the return on assets. On the other hand, results also show that NPA, capital adequacy ratio, bank operating expenses and inflation is negatively related with earnings per share. However, the results show that bank size, spread rate and GDP have positive relationship with earnings per share. The regression results show that NPA and BOE have negative and significant impact on return on assets. However, results show that CAR and spread rate have positive and significant impact on ROA of Nepalese commercial banks. Likewise, results show that beta coefficients are positive and significant for bank size and spread rate on EPS for Nepalese commercial banks. The regression results show bank operating expenses have negative and significant impact on EPS of Nepalese commercial banks. The result reveals that non-performing assets, spread rate and bank operating expenses are major determining variables in terms of ROA. The result reveals that dividend bank size, spread rate and bank operating expenses are major determining variables in terms of EPS.

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