Determinants of Financial Performance of Nepalese Commercial Banks: Evidence from Panel Data Approach

Shrestha, Purna Man

doi:10.3126/nrber.v32i2.35300

Cited by 15 publications

(26 citation statements)

References 4 publications

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“…The outcome shows a positive relationship between liquidity and the return on assets of the financial institution. which are aligned with the studies of Almaqtari et al (2018) and Shrestha et al (2020). while the ratio of deposits displays a negative association with the return on assets of the financial institution, which is consistent with Al-Homaidi, E. A.…”

Section: Correlation Matrixessupporting

confidence: 90%

“…The findings of this study on internal factors revealed that the success of commercial banks in Afghanistan was positively affected by liquidity and asset management. The finding was emphasized in many previous studies (Shrestha, 2020;Al-Homaidi et al, 2020;Masood, Yahya, et al, 2017;Ashraf & Ashraf, 2012). However, the results contradict some other studies (Rani & Zergaw, 2017;Naderi, 2021) that found a negative impact of liquidity on bank profitability.…”

Section: Discussionmentioning

confidence: 72%

“…(Ariyadasa et al, 2017;Knezevic & Dobromirov, 2016; Paolucci & Menicucc, 2016;Bekhet, H. A., Alsmadi, A. M., & Khudari, M., 2020;Shrestha, P. M., 2020;Bucevska & Misheva, 2017).Source:Al-Homaidi, E. A., Tabash, M. I., Farhan, N. H., & Almaqtari, F. A. (2018);Naderi, R. (2021) …”

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confidence: 99%

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Impact of Bank Specific and Macro-Economic Factors on Financial Performance of Commercial Banks in Afghanistan

Akbari¹,

Naseri²

2022

KJEMS

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This study was carried out to examine the effects of bank-specific factors and macroeconomics on the financial viability of commercial banks in Afghanistan. The ten banking institutions' panel data sets for the years 2010–2021 were used. A random Effect model of regression was applied. The model of random effects was recommended when the Hausman test was employed to confirm the models' fitness. The null hypotheses were also rejected based on the results of the Wooldridge test for serial correlation and the modified Wald test for group-wise heteroscedasticity. The findings of current research revealed that bank determinants, specifically liquidity and asset management, showed a positive but slight effect on bank profits, while deposit ratio, bank number of branches, and ATMs showed a negative influence. Regarding macroeconomic factors, the outcomes indicated that the influence of the GDP, exchange rate, and inflation rate on bank profitability was negative, while the interest rate, taxes, and industry growth rate had a positive and significant impact on bank profitability. Additionally, by highlighting weak points, the study's findings will assist the management of banks, financiers, the government, policymakers, and shareholders in taking better decisions and enhancing bank performance. Overall, decision-makers need to be better knowledgeable about the factors that affect the profitability of Afghan commercial banks.

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Section: Correlation Matrixessupporting

confidence: 90%

Section: Discussionmentioning

confidence: 72%

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Impact of Bank Specific and Macro-Economic Factors on Financial Performance of Commercial Banks in Afghanistan

Akbari¹,

Naseri²

2022

KJEMS

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“…Accounting measures is used to represent firm performance (Antle & Smith, 1986;Lambert & Larcker, 1987;Raithatha & Komera, 2016)). Following (Murphy,1985;Jensen and Murphy 1990;Gibbons and Murphy, 1990;Raithatha & Komera, 2016), (Sheikh et al, 2018), (Shrestha, 2020)return on equity (ROE) and ROA are used as the accounting based measures of firm performance. Further, firm specific variables such as size, leverage, and risk are considered as control variables, they could influence the pay-performance relationship.…”

Section: Methodsmentioning

confidence: 99%

Executive compensation and firm performance: Evidence from Nepalese commercial banks

Gyawali

2023

Lumbini J. Bus. & Econ.

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NRB provision to relate executive’s fixed annual compensation with staff salary and total assets of the respective Banks is different from those of other country (Bhatta, 2010). This is the first study to examine the relationship between executive compensation and firm performance in Nepalese banking industry. Data are collected from 21 commercial banks from the study period 2014/15 to 2020/ 21. Panel data are analyzed through pooled OLS and fixed effect model by using three control variables (i.e. Leverage, size and risk). Result showed that executive compensation is not influenced by firms performance in Nepalese commercial banks. Result also revealed that pay performance relationship is not influenced by size of the firms. It is concluded that possible reason for this insignificant relationship is contradict and impractical compensation directives issued by NRB, as claimed by (Bhatta,2010)

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“…In the Nepalese context, Gautam [32] verified the positive role of management efficiency, capital adequacy, and GDP and the negative role of liquidity management and asset quality in determining financial performance. Furthermore, Shrestha [33] observed that financial risk had the opposite influence on the success of banks in the Nepalese environment, while asset quality, management effectiveness, and operational effectiveness had a positive influence. Similarly, Gwachha [34] discovered a robust positive effect of the size of assets, deposit ratio, market size, and interest rate on the performance of banks and a significant adverse effect on loans portfolio.…”

Section: Introductionmentioning

confidence: 99%

Examining the Factors Affecting the Profitability of Commercial Banks

Shrestha¹

2023

J.Math.Instr.Soc.Res.Opin.

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This paper has assessed the determinants of the profitability of commercial banks operating in Nepal. The effect of macroeconomic as well as internal factors on profitability is estimated. For this purpose, ROA is used to measure a bank's profitability. Similarly, liquidity (LIQ), management efficiency (ME), assets quality (AQ), and operational efficiency (OE) are used as internal factors, and consumer price index (CPI), interest rate (IR), and growth rate of broad money supply (M2) are used as macro-economic factors. Based on the result of panel data analysis, this paper revealed that bank-specific and macroeconomic factors play an essential role in determining profitability. Further, this paper found that LIQ, ME, AQ, CPI, and IR substantially influence the profitability of banks operating in Nepal. Thus, this paper concluded that the bank management should improve its liquidity, efficiency of management, and quality of assets to improve profitability. Likewise, the bank management can benefit from increasing CPI and IR to improve profitability.

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Determinants of Financial Performance of Nepalese Commercial Banks: Evidence from Panel Data Approach

Cited by 15 publications

References 4 publications

Impact of Bank Specific and Macro-Economic Factors on Financial Performance of Commercial Banks in Afghanistan

Impact of Bank Specific and Macro-Economic Factors on Financial Performance of Commercial Banks in Afghanistan

Executive compensation and firm performance: Evidence from Nepalese commercial banks

Examining the Factors Affecting the Profitability of Commercial Banks

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