IMPACT OF BANKS CAPITAL ON PROFITIBILITY IN NEPALESE COMMERCIAL BANKS

Abstract

The study examined the impact of banks capital on profitability in Nepalese commercial banks. The main objective of the study is to examine the impact of banks capital on profitability of commercial bank in Nepal. Bank capital is one of the main task for financial decision and assist in making plan before using sophisticated forecasting and budgeting procedure. In this modern age increasing competition in the banking sector, capital management has become a greatest challenge to Nepalese commercial banking sector. This paper is aimed at examining the impact of banks capital of concerned commercial bank like Machhapuchchhre Bank Ltd, Sunrise Bank Ltd, Rastriya Banijya Bank Ltd, Global IME Bank Ltd & Citizens Bank International Ltd. This research has employed descriptive and explanatory research design. To explore the relationship and impact variables equity ratio, capital adequacy ratio, core capital ratio, efficiency ratio, bank size, loan ratio, deposit ratio, return on assets and return on equity are used. The study has covered the period from 2013/14 to 2022/2023 fiscal years. For the analysis purpose descriptive analysis is used as method. The finding reveals that equity ratio, capital adequacy ratio, core capital ratio, bank size, and deposit ratio have negative relation with return on assets. Efficiency ratio have positive and significance relation with return on assets and loan ratio have positive and significance relation with return on assets. Core capital ratio have negative relationship with return on equity. Equity ratio, capital adequacy ratio, loan ratio have negative and significance relationship between return on equity. Efficiency ratio and deposit ratio have positive and significance relationship between return on equity. It is found that efficiency ratio, loan ratio, deposit ratio have significance impact with return on assets and equity ratio, capital adequacy ratio, core capital ratio, bank size have no significance impact with return on assets. There is significance impact of core capital ratio and efficiency ratio with equity ratio. Equity ratio, capital adequacy ratio, bank size, loan ratio and deposit ratio have insignificance impact on return on equity.