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Default loan and cost efficiency in Nepalese Commercial banks / Sandeep Singh Sijapati
Title : Default loan and cost efficiency in Nepalese Commercial banks Material Type: printed text Authors: Sandeep Singh Sijapati, Author Publication Date: 2019 Pagination: 110p. Size: GRP/Thesis Accompanying material: 14/B Languages : English Abstract: Researchers over the last decades believe that there is a connection between default loans and cost efficiency. There are many studies published to examine this relationship. The relationship between default loans and cost efficiency are studied extensively by several researchers. In regards to the relationship between default loans and cost efficiency, researchers found different results. Some of the scholars' state that, default loans has negative relationship with cost efficiency. Meanwhile other researchers indicate the nonlinear negative and positive relationship between default loans and cost efficiency.
This study investigates the impact of default loans and cost efficiency and determinants of default loans and cost efficiency of commercial banks of Nepal. The study has employed descriptive and casual comparative research designs to deal with the fundamental issues associated with default loans and cost efficiencies and factors influencing these parameters in the context of Nepal. The study is based on secondary data. The variables used in the study are categorized into bank specific variables (capital adequacy ratio, return on assets, bank size, risk weighted assets, priority sector lending, credit growth, percentage of loan to deposit and percentage of loans loss provision to total loans). Similarly, this study covers data on bank specific variables for 6 years ranging for year 2011 to 2016.
The study reveals that default loans have significant impact on cost efficiency of banks and suggest specifically that bank should try to minimize default loans in order to achieve cost efficiency. More specifically, the study finds that capital adequacy ratio, credit growth, loan to deposit percentage, priority sector lending, and risk weighted assets, were statistically significant factors that determine the default loans of commercial banks in Nepal. However, the result did not support the significant effect of return on assets. Similarly, default loans, capital adequacy ratio, bank size and loan loss provision were statistically significant factors that determine the cost efficiency of commercial banks in Nepal.
The study observed a positive relationship between return on assets and default loans indicating that profitable banks have high default loans. Hence, it is recommend that banks should be able to maximize and maintain optimum ROA so that they don't have to go for lending in riskier assets to increase revenue. Likewise, the study observed a negative and significant relationship between capital adequacy ratio and default loans. Hence, it is recommended that banks should focus on enhancing their capital, as well capitalized banks are less incentive to take risk which reduces the percentage of problem loans in such banks. The study remains enough ground researchers in the same topic. The future studies can be done by using both secondary and primary data so that along with determinants of default loans and cost efficiency, perception of loan officers, operation officer as well as managers regarding the impact of default loans on cost efficiency can also be obtained. In addition to commercial banks, the future studies can select other financial institutions like development banks, finance companies, micro finance and cooperative scan be included in sample so as to grasp the wider view of impact of default loans on cost efficiency and their determinants.
Default loan and cost efficiency in Nepalese Commercial banks [printed text] / Sandeep Singh Sijapati, Author . - 2019 . - 110p. ; GRP/Thesis + 14/B.
Languages : English
Abstract: Researchers over the last decades believe that there is a connection between default loans and cost efficiency. There are many studies published to examine this relationship. The relationship between default loans and cost efficiency are studied extensively by several researchers. In regards to the relationship between default loans and cost efficiency, researchers found different results. Some of the scholars' state that, default loans has negative relationship with cost efficiency. Meanwhile other researchers indicate the nonlinear negative and positive relationship between default loans and cost efficiency.
This study investigates the impact of default loans and cost efficiency and determinants of default loans and cost efficiency of commercial banks of Nepal. The study has employed descriptive and casual comparative research designs to deal with the fundamental issues associated with default loans and cost efficiencies and factors influencing these parameters in the context of Nepal. The study is based on secondary data. The variables used in the study are categorized into bank specific variables (capital adequacy ratio, return on assets, bank size, risk weighted assets, priority sector lending, credit growth, percentage of loan to deposit and percentage of loans loss provision to total loans). Similarly, this study covers data on bank specific variables for 6 years ranging for year 2011 to 2016.
The study reveals that default loans have significant impact on cost efficiency of banks and suggest specifically that bank should try to minimize default loans in order to achieve cost efficiency. More specifically, the study finds that capital adequacy ratio, credit growth, loan to deposit percentage, priority sector lending, and risk weighted assets, were statistically significant factors that determine the default loans of commercial banks in Nepal. However, the result did not support the significant effect of return on assets. Similarly, default loans, capital adequacy ratio, bank size and loan loss provision were statistically significant factors that determine the cost efficiency of commercial banks in Nepal.
The study observed a positive relationship between return on assets and default loans indicating that profitable banks have high default loans. Hence, it is recommend that banks should be able to maximize and maintain optimum ROA so that they don't have to go for lending in riskier assets to increase revenue. Likewise, the study observed a negative and significant relationship between capital adequacy ratio and default loans. Hence, it is recommended that banks should focus on enhancing their capital, as well capitalized banks are less incentive to take risk which reduces the percentage of problem loans in such banks. The study remains enough ground researchers in the same topic. The future studies can be done by using both secondary and primary data so that along with determinants of default loans and cost efficiency, perception of loan officers, operation officer as well as managers regarding the impact of default loans on cost efficiency can also be obtained. In addition to commercial banks, the future studies can select other financial institutions like development banks, finance companies, micro finance and cooperative scan be included in sample so as to grasp the wider view of impact of default loans on cost efficiency and their determinants.
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Barcode Call number Media type Location Section Status 612/D SAN Thesis/Dissertation Uniglobe Library Philosophy & Psychology Available