Bank Specific and Macroeconomic Determinants of Bank Profitability: A Case of Nepal

Pradhan, Radhe Shyam

doi:10.2139/ssrn.2793484

Cited by 17 publications

(24 citation statements)

References 17 publications

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“…From the fixed effects model results with the dependent variables of ROA, ROE, and OPRWA, GDPGR confirm positive and significant relationships, meaning a positive influence exists in the variables’ relationships. The results are aligned with the findings in Basarır and Sarıhan (2017); Boitan (2015); Pradhan (2016); Topak and Talu (2017) although the study by Rehman et al. (2018) has not been confirmed since the author envisages a negative influence of GDP on profitability of banks.…”

Section: Discussionsupporting

confidence: 73%

Capital, liquidity, and profitability in European banks

Adelopo

Vichou

Cheung

2021

J Corp Accounting Finance

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The research aims to investigate the impact of increased capital requirements and high liquidity levels on the profitability of European banks in the post crisis period. The study examines the largest banks in the European Union spanning 28 countries using data from 2010 to 2018. It used three measures to define bank profitability: return on average assets, return on average equity, and operating profit to risk weighted assets. Capital, liquidity, size, and asset quality represent bank specific determinants, while economic growth and inflation are considered as the main external determinants having influence on profitability. We used multiple regression models to analyze the association amongst the variables. The results revealed a positive and significant association between liquidity level and bank performance. Asset quality showed a negative and statistically significant influence on bank performance, while economic growth and inflation have no significant influence on bank performance. The study concludes that there is limited influence of the Basel III on bank profitability although the policy is important in achieving banking stability. This study contributes to the literature by empirically analyzing the impact of capital regulation on bank performance for the biggest banks in Europe. Although the Basel III framework is important for prudential banking, its effects on the performance of European bank is debatable.

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Section: Discussionsupporting

confidence: 73%

Capital, liquidity, and profitability in European banks

Adelopo

Vichou

Cheung

2021

J Corp Accounting Finance

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“…In Table 3, the regression coefficient of loan to deposit ratio (β1 = -0.022, p <.01) indicates that a higher loan to deposit ratio resulted in the lower ROA to the Nepalese commercial banks. This result is in line with the findings of prior researchers (Adolopo, Lloydking, & Tauringgana, 2018;Asmed, Koh, & Shaharudin, 2016;Tarraze, 2015), but contradicts the findings of some other researchers (Pradhan, 2016;Tan, 2016;Tan, 2017). The result of this regression coefficient was supported by these facts: Relatively high levels of loan to deposit ratio (lower liquidity) produced negative ROA and reduced liquid funds in order to grab market opportunities, eventually lowering the bank's profitability.…”

Section: Regression Resultssupporting

confidence: 85%

Untitled

2020

jeb

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Green Marketing is among the contemporary issues in the field of Marketing. While many studies have been done in this field elsewhere, little studies have been conducted in Tanzania. Thus, this study aimed at identifying the level of green marketing adoption among agro-processing businesses in the context of Tanzania and studying the influence of business size on green marketing adoption. Data were collected from 120 micro, small and medium enterprises operating in agro-processing sector in Morogoro region. The findings show that, the level of adoption of green marketing practices is low as most businesses adopted relatively few practices. Also, it was found that, there is an association between business size and level of adoption of green marketing practices. It has to be noted that, the findings are limited to agro processing industry in Morogoro since the applicability of these findings to other industries is uncertain as data were collected in agro-processing industry.

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“…Though the significant factor of banking profitability seems alike, the direction of impact of external factors like market share (here represented by concentration ratio) and GDP also contradict with the study of Pradhan (2018) in Nepalese context.…”

Section: Regression Analysismentioning

confidence: 70%

Profitability determinants of Nepalese commercial banks

Neupane¹

2020

Pressacademia

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Purpose-The purpose of this study is to examine the the key determinants of profitability of Nepalese commercial banks. Methodology-This study employs descriptive statistics to describe the profitability of Nepalese banks and its determinants. Further, the degree of correlation among different indicators of profitability and its determinants has been assessed by calculating correlation coefficient. Finally, this study has adopted a panel data regression model (Fixed Effect Model and Random Effect Model) to investigate the determinants and their impact on profitability of Nepalese commercial banks. Findings-The analysis reveals that the bank pofitability measured by ROA of Nepalese commercial banks is significantly affected by concentration ratio, banking sector development, GDP growth, inflation and exchange rate significantly in opposite direction rather it is not significantly affected by the internal factors like bank size, capital base, deposit, loan, off-balance sheet activities and number of branches. Another indicator of bank profitability; NIM is significantly affected only by capital adequacy, absolute number of branches and inflation rate. Conclusion-This study concluded that the profitability of Nepalese commercial banks measured by return on assets is significantly influenced by the external factors. Among external factors, industry specific factors have high degree of impact on return on assets whereas macroeconomic variables have quite a weak degree but significant impact on profitability of Nepalese commercial banks as measured by return on assets. Further, the profitability measured by net interest margin (NIM) is significantly influenced only by capital adequacy, absolute number of branches and annual inflation rate.

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Bank Specific and Macroeconomic Determinants of Bank Profitability: A Case of Nepal

Cited by 17 publications

References 17 publications

Capital, liquidity, and profitability in European banks

Capital, liquidity, and profitability in European banks

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Profitability determinants of Nepalese commercial banks

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