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Effects of the central bank prudential guidelines on the performance of Nepalese commercial banks / Bishal Acharya
Title : Effects of the central bank prudential guidelines on the performance of Nepalese commercial banks Material Type: printed text Authors: Bishal Acharya, Author Publication Date: 2018 Pagination: 109p. Size: GRP/Thesis Accompanying material: 12/B Languages : English Abstract: Pasiouras (2009) revealed that bank regulation increased the market discipline and enhanced the banks cost efficiency. Bank regulations are a form of government regulation which subjected the banks to certain requirements, restrictions and guidelines. This regulatory structure creates transparency between banking institutions and the corporation with whom they conduct business, among other factors. Regulations aimed at ensuring the safe and sound operation of financial institutions, set by both state and federal authorities. On one hand, it serves as prudential measures that mitigate the effects of economic crises on the stability of the banking system and subsequent accompanying macroeconomic results. On the other hand, excessive regulations may increase the cost of inter mediation and reduce the profitability of the banking industry.
The health of the financial system has important role in the country (Das & Ghosh, 2007). The failure can disrupt economic development of the country in order to prevents such risks form the future uncertainty central bank must regulated the operations of commercial banks on a regular basis. Commercial banks are the most important savings mobilization and financial resources allocation institution. Eventually, those roles make them an important phenomenon in economic growth and development. In order for them to perform these roles, it must be realized that banks have the potential, scope and prospects of financial inter mediation (Olokoyo, 2011)
This study attempts to observe the effect of central bank prudential guidelines on the performance of Nepalese commercial banks regulations. This study is based on secondary data of 18 commercial banks of Nepal for the time period of 2008/09 to 2016/17, leading to a total of 162 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 central bank regulations and the performance of Nepalese commercial banks.
The result shows that average return on assets is highest for NBBL (3.78 percent) and lowest for NCCBL (1.65 percent). Similarly, the average return on equity is highest for NABIL(28.53 percent) and lowest for MBL (9.01 percent), the average non-performing loan ratio is highest for ADBL (7.09 percent) and lowest for SUBL (0.26 percent), the average capital adequacy ratio is highest for ADBL (17.61 percent) and lowest for HBL (10.19 percent), the average liquidity ratio for SCBL (54.58 percent) and lowest for ADBL (23.62 percent), the average operating expense ratio is highest for ADBL (53.27 percent) and lowest for NIBL (25.16 percent), the average interest rate spread is highest for ADBL (6.16 percent) and lowest for NSBI (3.28 percent), the average bank size is highest for NABIL (Rs.86.84 billion) and lowest for NMBL (Rs.8.72 billion).
The descriptive statistics indicates that the average return on equity is 18.30 percent, return on assets is 1.73 percent, interest rate spread is 4.20 percent, non-performing loan ratio is 2.22 percent, capital adequacy ratio is 12.97 percent, deprived sector lending is Rs. 1498.35 million, credit to core deposit ratio is 15.02 percent, and cash reserve ratio is 15.02 percent.
The correlation matrix shows that there is positive relationship between interest rate spread, non-performing loan ratio and deprived sector lending with return on equity. It indicates that higher the interest rate spread higher would be return on equity. Similarly, interest rate spread, non-performing loan ratio, and deprived sector lending is positively related to return on assets. It indicates that increase in interest rate spread and non-performance loan ratio leads to increase on return on assets. There is negative relationship between capital adequacy ratio, credit to core deposit ratio, and cash reserve ratio with return on equity. It indicates that higher the capital adequacy ratio, credit to core deposit ratio and cash reserve ratio lower would be return on equity. The result also shows that capital adequacy ratio and credit to core deposit ratio negatively related to return on assets. It indicates that increase in capital adequacy ratio and credit to core deposit ratio leads to increase in return on assets.
The regression result shows that interest rate spread, non-performing loan ratio and deprived sector lending have positive and significant impact on return on assets. It indicates that larger the interest rate spread, non-performing loan ratio and deprived sector lending higher would be the return on assets.Similarly, interest rate spread and non-performing loan ratio have positive and significant impact on return on equity. It indicates that higher the interest rate spread and non-performing loan ratio higher would be return on equity.However, capital adequacy ratio, credit to core deposit ratio and cash reserve ratio has negative and significant impact on return on assets. The result indicated that higher the capital adequacy ratio, credit to core deposit ratio and cash reserve ratio lower would be return on assets. Moreover, the result also shows that capital adequacy ratio, credit to core deposit ratio and cash reserve ratio has negative and significant impact on return on equity. It indicates that larger the capital adequacy ratio, credit to core deposit ratio and cash reserve ratio higher would be the return on equity.
Effects of the central bank prudential guidelines on the performance of Nepalese commercial banks [printed text] / Bishal Acharya, Author . - 2018 . - 109p. ; GRP/Thesis + 12/B.
Languages : English
Abstract: Pasiouras (2009) revealed that bank regulation increased the market discipline and enhanced the banks cost efficiency. Bank regulations are a form of government regulation which subjected the banks to certain requirements, restrictions and guidelines. This regulatory structure creates transparency between banking institutions and the corporation with whom they conduct business, among other factors. Regulations aimed at ensuring the safe and sound operation of financial institutions, set by both state and federal authorities. On one hand, it serves as prudential measures that mitigate the effects of economic crises on the stability of the banking system and subsequent accompanying macroeconomic results. On the other hand, excessive regulations may increase the cost of inter mediation and reduce the profitability of the banking industry.
The health of the financial system has important role in the country (Das & Ghosh, 2007). The failure can disrupt economic development of the country in order to prevents such risks form the future uncertainty central bank must regulated the operations of commercial banks on a regular basis. Commercial banks are the most important savings mobilization and financial resources allocation institution. Eventually, those roles make them an important phenomenon in economic growth and development. In order for them to perform these roles, it must be realized that banks have the potential, scope and prospects of financial inter mediation (Olokoyo, 2011)
This study attempts to observe the effect of central bank prudential guidelines on the performance of Nepalese commercial banks regulations. This study is based on secondary data of 18 commercial banks of Nepal for the time period of 2008/09 to 2016/17, leading to a total of 162 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 central bank regulations and the performance of Nepalese commercial banks.
The result shows that average return on assets is highest for NBBL (3.78 percent) and lowest for NCCBL (1.65 percent). Similarly, the average return on equity is highest for NABIL(28.53 percent) and lowest for MBL (9.01 percent), the average non-performing loan ratio is highest for ADBL (7.09 percent) and lowest for SUBL (0.26 percent), the average capital adequacy ratio is highest for ADBL (17.61 percent) and lowest for HBL (10.19 percent), the average liquidity ratio for SCBL (54.58 percent) and lowest for ADBL (23.62 percent), the average operating expense ratio is highest for ADBL (53.27 percent) and lowest for NIBL (25.16 percent), the average interest rate spread is highest for ADBL (6.16 percent) and lowest for NSBI (3.28 percent), the average bank size is highest for NABIL (Rs.86.84 billion) and lowest for NMBL (Rs.8.72 billion).
The descriptive statistics indicates that the average return on equity is 18.30 percent, return on assets is 1.73 percent, interest rate spread is 4.20 percent, non-performing loan ratio is 2.22 percent, capital adequacy ratio is 12.97 percent, deprived sector lending is Rs. 1498.35 million, credit to core deposit ratio is 15.02 percent, and cash reserve ratio is 15.02 percent.
The correlation matrix shows that there is positive relationship between interest rate spread, non-performing loan ratio and deprived sector lending with return on equity. It indicates that higher the interest rate spread higher would be return on equity. Similarly, interest rate spread, non-performing loan ratio, and deprived sector lending is positively related to return on assets. It indicates that increase in interest rate spread and non-performance loan ratio leads to increase on return on assets. There is negative relationship between capital adequacy ratio, credit to core deposit ratio, and cash reserve ratio with return on equity. It indicates that higher the capital adequacy ratio, credit to core deposit ratio and cash reserve ratio lower would be return on equity. The result also shows that capital adequacy ratio and credit to core deposit ratio negatively related to return on assets. It indicates that increase in capital adequacy ratio and credit to core deposit ratio leads to increase in return on assets.
The regression result shows that interest rate spread, non-performing loan ratio and deprived sector lending have positive and significant impact on return on assets. It indicates that larger the interest rate spread, non-performing loan ratio and deprived sector lending higher would be the return on assets.Similarly, interest rate spread and non-performing loan ratio have positive and significant impact on return on equity. It indicates that higher the interest rate spread and non-performing loan ratio higher would be return on equity.However, capital adequacy ratio, credit to core deposit ratio and cash reserve ratio has negative and significant impact on return on assets. The result indicated that higher the capital adequacy ratio, credit to core deposit ratio and cash reserve ratio lower would be return on assets. Moreover, the result also shows that capital adequacy ratio, credit to core deposit ratio and cash reserve ratio has negative and significant impact on return on equity. It indicates that larger the capital adequacy ratio, credit to core deposit ratio and cash reserve ratio higher would be the return on equity.
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Barcode Call number Media type Location Section Status 520/D ACH Thesis/Dissertation Uniglobe Library Philosophy & Psychology Available