This paper explored the impact of capital regulation on the banking industry in Nepal and sought to understand the reasons behind the requirements for higher capital in the country compared to global standards set by the Basel Committee on Banking Supervision (BCBS). The paper incorporated semi-structured interviews with experts from banks and the Nepal Rastra Bank (NRB) and employed thematic analysis to analyze the responses. The main factors driving higher capital requirements in Nepal were identified as risk management practices, financial stability, and the cost of financing, including the supervisory review process and the internal control systems of banks. The study found that the banking industry in Nepal lacks strong risk management policies and practices and that the regulator places a greater emphasis on ensuring the stability and resilience of banks rather than minimizing the economic cost of financing. Additionally, the corporate governance and internal control systems of banks in Nepal were found to be suboptimal.

Nepal's reliance on imports and its vulnerable position to external economic shocks, understanding the factors that drive inflation is especially important in order to ensure stability and competitiveness in the country's economy. This research aims to explore the factors t hat influence inflation in Nepal over the period from 2000 to 2021. To do so, we analyzed the relationship between the current account, government expenditure, money supply, and inflation using empirical methods and statistical techniques such as the OLS method and ADF test for stationarity, as well as static forecasting and a VAR model. We hypothesized that a deficit in the current account, high levels of government expenditure, and an increase in the money supply may contribute to higher domestic inflation. Our analysis revealed that there was high multicollinearity and non-stationary time series data, but the regression model had satisfactory predictive power. Additionally, we found that an exogenous shock to inflation had an immediate effect on government expenditure, current account, and money supply, and there was a unidirectional causality between inflation and money supply. These findings can help policymakers make informed economic decisions to minimize negative impacts on Nepal's economy.