Profitability in Commercial Bank – A Case Study of Nepal

Authors

  • Anjay Kumar Mishra Post Doctoral Research Scholar, Srinivas University, India and Associate Professor, Madan Bhandari Memorial Academy Nepal, Urlabari3, Morang, Nepal
  • Deepak Raj Kandel Visiting Faculty, Sanker Dev Campus, TU
  • Aithal P. S. Vice Chancellor, Srinivas University, Karnataka, India

DOI:

https://doi.org/10.47992/IJCSBE.2581.6942.0101

Keywords:

ROA, ROE, NIM, Size, Trends

Abstract

Purpose: Banking in Nepal is under the process of being systematized. Foreign aid is believed as key component for development in Nepal. This study aims to assess the impact, contribution and relationship of size, loans and deposit, inflation and capital on the profitability of the banks.

Design/Methodology/Approach: Secondary data from 2013 to 2019 from seven commercial banks along with the survey as primary data were collected. The correlation and regression along with ratio analysis have been used to assure a contributory association among return on assets (ROA), return on equity (ROE) and net interest margin (NIM).

Findings/Result: The size of banks is in increasing trend. The decreasing trend of standard deviation showed that the size of Nepalese commercial banks has lower variation in the use of total assets as the year increases. There is a negative relation between ROA and ROE with loan ratio, deposit ratio and capital ratio, while there is positive relation with bank size and inflation. However, in case of NIM, bank size, loan ratio, deposit ratio and inflation exhibit a positive relation while the capital ratio shows the negative relationship with NIM. Majority of the respondents feel that the publication of financial reports is one of the major influencing factors of bank profitability.

Originality/Value: It is an empirical research to signify the contribution of Bank Size, Loan Ration, Deposit Ratio, Capital Ratio and Inflation as determinants of Profitability.

Paper Type: Analytical Business Research.

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Published

2021-05-13

How to Cite

Anjay Kumar Mishra, Deepak Raj Kandel, & Aithal P. S. (2021). Profitability in Commercial Bank – A Case Study of Nepal. International Journal of Case Studies in Business, IT and Education (IJCSBE), 5(1), 61–77. https://doi.org/10.47992/IJCSBE.2581.6942.0101