Determinants of Financial Performance in Nepalese Financial Performance

11 Pages Posted: 22 Jan 2018

See all articles by Poonam Rai

Poonam Rai

Independent

Prakash Ojha

Independent

Prerana Singh

Independent

Rachana Gyawali

Independent

Rajesh Gupta

Quest International University

Date Written: January 14, 2018

Abstract

This study examines the effect of bank specific variables and macroeconomic variables on performance of Nepalese financial institutions. The return on equity, return on assets and net interest margin were selected as dependent variables while capital adequacy ratio, assets quality, management efficiency, liquidity management, GDP growth rate and inflation were chosen as independent variables. The data were collected from the Banking and Financial Statistics and Supervision Report published by Nepal Rastra Bank, and annual reports of selected banks. The regression models were estimated to test the effect of bank specific variables and macroeconomic variables on performance of Nepalese financial institutions.

The result shows that higher the capital adequacy ratio, management efficiency and liquidity management, higher would be the return on equity and return on assets. Likewise higher the GDP growth rate and inflation rate, higher would be the return on equity and return on assets. The study also indicates that higher the assets quality lower would be the return on equity and return on assets.

The study also reveals that larger the capital adequacy ratio and assets quality, higher would be the net interest margin. It also shows that higher the management efficiency, liquidity management, GDP growth rate and inflation rate, higher would be the net interest margin.

Keywords: Return on Equity, Return on Assets, Net Interest Margin, Capital Adequacy Ratio, Assets Quality, Management Efficiency, Liquidity Management, GDP Growth Rate, Inflation

Suggested Citation

Rai, Poonam and Ojha, Prakash and Singh, Prerana and Gyawali, Rachana and Gupta, Rajesh, Determinants of Financial Performance in Nepalese Financial Performance (January 14, 2018). Available at SSRN: https://ssrn.com/abstract=3101740 or http://dx.doi.org/10.2139/ssrn.3101740

Poonam Rai

Independent

Prakash Ojha

Independent ( email )

Prerana Singh

Independent ( email )

Rachana Gyawali

Independent ( email )

Rajesh Gupta (Contact Author)

Quest International University ( email )

Kathmandu
Lalitpur
Perak +977
Nepal
9843704840 (Phone)

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