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Risk management practices and financial performance in Nepalese commercial banks / Sunil Chaudhary
Title : Risk management practices and financial performance in Nepalese commercial banks Material Type: printed text Authors: Sunil Chaudhary, Author Publication Date: 2016 Pagination: 112p. Size: GRP/Thesis Accompanying material: 9/B Languages : English Descriptors: Risk management Class number: 332.106 Abstract: Commercial banks play an important role for economic development and foster economic growth by providing number of financial services. 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, it is constantly facing different types of risk. The risky lending increases the profitability in one hand while on the other hand, it can lead to the bank failure too if cannot be managed properly. In such circumstances, credit character, credit monitoring, repayment capacity of borrower, liquidity, bank size, interest rate spread, non-performing loan ratio, capital adequacy ratio and the concept of prudent lending plays a great role for analyzing the impact of risk management on the financial performance in the context of commercial banks of Nepal. The survival and success of a financial organization depends critically on the efficiency of managing these risks (Khan and Ahmed, 2001).
Kithinji (2010) showed that there is an indirect relationship between non-performing loans, an indicator of credit risk with profitability. Demirguc-Kunt and Huizinga (2001) found a significant negative relationship between liquidity and profitability. Dietrich and Wanzenried (2011) revealed a positive relationship between bank size and bank profitability.Gaur and Gupta (2011) supported the positive relationship arguing that experience through age helps the business to perform better. Khan (2014) found that there is strong and positive correlation between interest rate and commercial banks profitability. Ongore and Kusa (2013) showed that capital adequacy, non-performing loan ratio significantly affect the performance of commercial banks.
The major objective of the study is to assess the relationship between risk management practices and financial performance in Nepalese commercial banks. The study is based on secondary data of 20 commercial banks with 120 observations for the period of 2009/10 to 2014/15. 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 risk management practices and financial performance of Nepalese commercial banks.
The result shows that NBBL has highest average ROA, NABIL has the highest average ROE and ADBL has the highest NIM among the selected commercial banks throughout the study period. Similarly, the average non-performing loan ratio is highest for ADBL (6.41 percent),average liquidity ratio is highest for NSBI (50.64 percent, average size is largest for NABIL (Rs.74998.93 millions), average interest rate spread is highest for ADBL (6.11 percent) , average capital adequacy ratio is highest for JBL (27.99 percent) and average bank age is highest for ADBL (45.50years).The descriptive statistics for the selected commercial banks reveals that the average return on assets, return on equity, net interest margin, non-performing loan ratio, liquidity ratio, bank size, interest rate spread, capital adequacy ratio and bank age is 1.66 percent, 17.00 percent, 3.41 percent, 2.05 percent, 26.48 percent, Rs. 40111.36 millions, 4.21 percent, 13.59 percent and 16.85 years respectively.
The study found that the non-performing loan ratio, liquidity ratio has negative relationship with financial performance of the banks. This indicates that an increase in non-performing loan ratio, liquidity ratio leads to decrease in return on assets, return on equity and net interest margin. Likewise, result shows that capital adequacy ratio has negative relationship with return on equity. However, result shows that capital adequacy ratio has positive relationship with return on assets and net interest margin. Similarly, the study reveals that bank’s size, interest rate spread and bank’s age are positively related to financial performance of Nepalese commercial banks.
The results of the regression analysis show that non-performing loan ratio has negative relationship with return on assets whereas it has negative and significant relationship with return on equity and net interest margin. Likewise, liquidity ratio has negative relationship with return on assets and return on equity whereas it has negative and significant relationship with net interest margin. The result also concludes that capital adequacy ratio has positive relationship with return on assets and net interest margin. However, it has negative and significant relationship with return on equity. Similarly, the study reveals that bank’s size, interest rate spread and bank’s age have positive and significant relationship with return on assets, return on equity and net interest margin. The beta coefficient for non-performing loan ratio with return on equity is significant at 5 percent level of significance. Thus, bank size, interest rate spread and bank ages are the major factors affecting the profitability of Nepalese commercial banks.
Risk management practices and financial performance in Nepalese commercial banks [printed text] / Sunil Chaudhary, Author . - 2016 . - 112p. ; GRP/Thesis + 9/B.
Languages : English
Descriptors: Risk management Class number: 332.106 Abstract: Commercial banks play an important role for economic development and foster economic growth by providing number of financial services. 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, it is constantly facing different types of risk. The risky lending increases the profitability in one hand while on the other hand, it can lead to the bank failure too if cannot be managed properly. In such circumstances, credit character, credit monitoring, repayment capacity of borrower, liquidity, bank size, interest rate spread, non-performing loan ratio, capital adequacy ratio and the concept of prudent lending plays a great role for analyzing the impact of risk management on the financial performance in the context of commercial banks of Nepal. The survival and success of a financial organization depends critically on the efficiency of managing these risks (Khan and Ahmed, 2001).
Kithinji (2010) showed that there is an indirect relationship between non-performing loans, an indicator of credit risk with profitability. Demirguc-Kunt and Huizinga (2001) found a significant negative relationship between liquidity and profitability. Dietrich and Wanzenried (2011) revealed a positive relationship between bank size and bank profitability.Gaur and Gupta (2011) supported the positive relationship arguing that experience through age helps the business to perform better. Khan (2014) found that there is strong and positive correlation between interest rate and commercial banks profitability. Ongore and Kusa (2013) showed that capital adequacy, non-performing loan ratio significantly affect the performance of commercial banks.
The major objective of the study is to assess the relationship between risk management practices and financial performance in Nepalese commercial banks. The study is based on secondary data of 20 commercial banks with 120 observations for the period of 2009/10 to 2014/15. 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 risk management practices and financial performance of Nepalese commercial banks.
The result shows that NBBL has highest average ROA, NABIL has the highest average ROE and ADBL has the highest NIM among the selected commercial banks throughout the study period. Similarly, the average non-performing loan ratio is highest for ADBL (6.41 percent),average liquidity ratio is highest for NSBI (50.64 percent, average size is largest for NABIL (Rs.74998.93 millions), average interest rate spread is highest for ADBL (6.11 percent) , average capital adequacy ratio is highest for JBL (27.99 percent) and average bank age is highest for ADBL (45.50years).The descriptive statistics for the selected commercial banks reveals that the average return on assets, return on equity, net interest margin, non-performing loan ratio, liquidity ratio, bank size, interest rate spread, capital adequacy ratio and bank age is 1.66 percent, 17.00 percent, 3.41 percent, 2.05 percent, 26.48 percent, Rs. 40111.36 millions, 4.21 percent, 13.59 percent and 16.85 years respectively.
The study found that the non-performing loan ratio, liquidity ratio has negative relationship with financial performance of the banks. This indicates that an increase in non-performing loan ratio, liquidity ratio leads to decrease in return on assets, return on equity and net interest margin. Likewise, result shows that capital adequacy ratio has negative relationship with return on equity. However, result shows that capital adequacy ratio has positive relationship with return on assets and net interest margin. Similarly, the study reveals that bank’s size, interest rate spread and bank’s age are positively related to financial performance of Nepalese commercial banks.
The results of the regression analysis show that non-performing loan ratio has negative relationship with return on assets whereas it has negative and significant relationship with return on equity and net interest margin. Likewise, liquidity ratio has negative relationship with return on assets and return on equity whereas it has negative and significant relationship with net interest margin. The result also concludes that capital adequacy ratio has positive relationship with return on assets and net interest margin. However, it has negative and significant relationship with return on equity. Similarly, the study reveals that bank’s size, interest rate spread and bank’s age have positive and significant relationship with return on assets, return on equity and net interest margin. The beta coefficient for non-performing loan ratio with return on equity is significant at 5 percent level of significance. Thus, bank size, interest rate spread and bank ages are the major factors affecting the profitability of Nepalese commercial banks.
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Barcode Call number Media type Location Section Status 283/D 332.106 CHA Thesis/Dissertation Uniglobe Library Social Sciences Available Risk management practices in Nepalese commercial bank / Srijana Timilsina
Title : Risk management practices in Nepalese commercial bank Material Type: printed text Authors: Srijana Timilsina, Author Publication Date: 2016 Pagination: 86p. Size: GRP/Thesis Accompanying material: 5/B General note: Including bibilography Languages : English Descriptors: Banks
Banks and banking
Commercial banks
Risk managementKeywords: 'risk management financial risk t, enterprise risk mananagement t, strategic risk management' Class number: 332.106 Abstract: During the last two decades the banking sector has experienced worldwide major transformations in its operating environment. 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. So, banks need to analyze the risk and appropriate methods to mitigate the risks. The relationship between risk and many variables are studied extensively in different period of time. In regards to the relationship different results are found.Banks during the course of financial intermediation are confronted with various types of financial and non-financial risks.Banking is the business of risk (Al-Tamimi & Al-Mazrooei, 2007).Risks are uncertainties that could result in adverse variations of profitability or in losses (Bessis, 2011). Some risks cannot be eliminated or transferred due to the complexity and dynamism, so banks have to undertake the risks. In fact, banking business is the risky business so it dealt with risks and gets rewarded accordingly. The objective of financial institutions is to maximize profits and shareholder value by providing different financial services by managing risks (Ahmed et al., 2011).
Risk refers to possibility that the outcome of an action or event of bank, could bring up serious adverse impacts on bank’s profitability and performance resulting either a direct loss of earnings or capital. Therefore, the risk is interchangeably with uncertainty to refer the variability of returns associated with a given asset. The objective of financial institutions is to maximize profits and shareholder value by providing different financial services by managing risks. Risk management is aimed at protecting the organization, its people, assets and profits, against consequences and more particularly to reduce the severity and variability of losses. In another words risk management is the identification, analysis and economic control of those risks which threaten the asset or earning capacity of the organization.The main purpose of this study is to analyse the risk management practices of the Nepalese commercial banks with respect to the bank specific variables
The results in the prior studies on risk management practice are mixed and unclear. Hence, this study has been conducted to get clear idea of the risk management approaches of Nepalese commercial banks. For this, the sample of 16 commercial banks with data of 11 years from 2002/03 to 2012/13 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 risk measures like credit risk (CR), liquidity risk (LR) and operational risk (OR) of the banks have been used as the dependent variable. Non -performing loan ratio, capital adequacy ratio, debt equity ratio, assets management and size have been considered as independent variables. Based on the results, capital adequacy ratio, non performing loan ratio, assets management, debt assets ratio and size in Nepal are important risk variable.
The recommendation put forward by this study is that banks are suggested to decrease the non performing loan to mitigate the credit risk and liquidity risk. On the other hand this study suggests that banks should maintain the capital adequacy ratio directed by NRB, because it reduce the risks avail in the future.
The major limitation of this study is that this study has excluded some bank macroeconomic variables that might have effect on risk of the commercial 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 risk management practices.Risk management practices in Nepalese commercial bank [printed text] / Srijana Timilsina, Author . - 2016 . - 86p. ; GRP/Thesis + 5/B.
Including bibilography
Languages : English
Descriptors: Banks
Banks and banking
Commercial banks
Risk managementKeywords: 'risk management financial risk t, enterprise risk mananagement t, strategic risk management' Class number: 332.106 Abstract: During the last two decades the banking sector has experienced worldwide major transformations in its operating environment. 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. So, banks need to analyze the risk and appropriate methods to mitigate the risks. The relationship between risk and many variables are studied extensively in different period of time. In regards to the relationship different results are found.Banks during the course of financial intermediation are confronted with various types of financial and non-financial risks.Banking is the business of risk (Al-Tamimi & Al-Mazrooei, 2007).Risks are uncertainties that could result in adverse variations of profitability or in losses (Bessis, 2011). Some risks cannot be eliminated or transferred due to the complexity and dynamism, so banks have to undertake the risks. In fact, banking business is the risky business so it dealt with risks and gets rewarded accordingly. The objective of financial institutions is to maximize profits and shareholder value by providing different financial services by managing risks (Ahmed et al., 2011).
Risk refers to possibility that the outcome of an action or event of bank, could bring up serious adverse impacts on bank’s profitability and performance resulting either a direct loss of earnings or capital. Therefore, the risk is interchangeably with uncertainty to refer the variability of returns associated with a given asset. The objective of financial institutions is to maximize profits and shareholder value by providing different financial services by managing risks. Risk management is aimed at protecting the organization, its people, assets and profits, against consequences and more particularly to reduce the severity and variability of losses. In another words risk management is the identification, analysis and economic control of those risks which threaten the asset or earning capacity of the organization.The main purpose of this study is to analyse the risk management practices of the Nepalese commercial banks with respect to the bank specific variables
The results in the prior studies on risk management practice are mixed and unclear. Hence, this study has been conducted to get clear idea of the risk management approaches of Nepalese commercial banks. For this, the sample of 16 commercial banks with data of 11 years from 2002/03 to 2012/13 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 risk measures like credit risk (CR), liquidity risk (LR) and operational risk (OR) of the banks have been used as the dependent variable. Non -performing loan ratio, capital adequacy ratio, debt equity ratio, assets management and size have been considered as independent variables. Based on the results, capital adequacy ratio, non performing loan ratio, assets management, debt assets ratio and size in Nepal are important risk variable.
The recommendation put forward by this study is that banks are suggested to decrease the non performing loan to mitigate the credit risk and liquidity risk. On the other hand this study suggests that banks should maintain the capital adequacy ratio directed by NRB, because it reduce the risks avail in the future.
The major limitation of this study is that this study has excluded some bank macroeconomic variables that might have effect on risk of the commercial 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 risk management practices.Hold
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Barcode Call number Media type Location Section Status 206/D 332.106 TIM Thesis/Dissertation Uniglobe Library Social Sciences Available Risk management practices in nepalese commercial banks / Gopal Joshi
Title : Risk management practices in nepalese commercial banks Material Type: printed text Authors: Gopal Joshi, Author Publication Date: 2013 Pagination: 124p. Size: GRP/Thesis Accompanying material: 2013 General note: Including bibliography
Languages : English Descriptors: Bank management
Commercial banks
Gopal Joshi
Nepal
Risk managementKeywords: 'Risk management', 'management practices'gopal joshi nepal bank management commercial bank' Class number: 332.106 Risk management practices in nepalese commercial banks [printed text] / Gopal Joshi, Author . - 2013 . - 124p. ; GRP/Thesis + 2013.
Including bibliography
Languages : English
Descriptors: Bank management
Commercial banks
Gopal Joshi
Nepal
Risk managementKeywords: 'Risk management', 'management practices'gopal joshi nepal bank management commercial bank' Class number: 332.106 Hold
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Barcode Call number Media type Location Section Status 4/D 332.106 JOS Thesis/Dissertation Uniglobe Library Social Sciences Available Risk management practices: a survey of commercial banks in Nepal / Dipesh Banepali
Title : Risk management practices: a survey of commercial banks in Nepal Material Type: printed text Authors: Dipesh Banepali, Author Publication Date: 2013 Pagination: 78p. Size: GRP/Thesis Accompanying material: 1/B General note: Including bibliography Languages : English Descriptors: Bank management
Banks and banking
Commercial banks
Nepal
Risk managementKeywords: 'risk management bank management banks commercial banks nepal deepesh banepali' Class number: 332.106 Risk management practices: a survey of commercial banks in Nepal [printed text] / Dipesh Banepali, Author . - 2013 . - 78p. ; GRP/Thesis + 1/B.
Including bibliography
Languages : English
Descriptors: Bank management
Banks and banking
Commercial banks
Nepal
Risk managementKeywords: 'risk management bank management banks commercial banks nepal deepesh banepali' Class number: 332.106 Hold
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Barcode Call number Media type Location Section Status 19/D 332.106 BAN Thesis/Dissertation Uniglobe Library Social Sciences Available