DETERMINANTS OF CAPITAL ADEQUACY IN NEPALESE DEVELOPMENT BANKS

Abstract

The objectives of study are to assess the current status of the Return on Assets, Return on Equity, Liquidity Risk, Credit Risk, and Debt to Assets Ratio, Loan to Assets, Leverage Ratio, Gross Domestic Product and Capital Adequacy Ratio of Nepalese development banks. To examine the relationship of Return on Assets, Return on Equity, Liquidity Risk, Credit Risk, and Debt to Assets Ratio, Loan to Assets, Leverage Ratio, and Gross Domestic Product to the Capital Adequacy Ratio of Nepalese development banks. To analyze the impact of Return on Assets, Return on Equity, Liquidity Risk, Credit Risk, and Debt to Assets Ratio, Loan to Assets, Leverage Ratio, and Gross Domestic Product on the Capital Adequacy Ratio of Nepalese development banks. The article reviewed from the google scholar. In Nepalese context article from the google scholar, TU sites and shanker dev campus library. This research has utilized descriptive and casual comparative research designs to address issues related to the determinants of capital adequacy ratio. Sample is selected using random sampling method. Secondary data are used in this research. Financial and statistical analysis are conducted. It is found that the higher variation or fluctuating are found in the dependent and independent variables they are; capital adequacy ratio, return on assets, return on equity, liquidity risk, credit risk, loan to assets, leverage ratio and gross domestic product. The relationship of return on equity and leverage has significant to the capital adequacy ratio. The return on equity, liquidity ratio, credit risk, loan to assets ratio and gross domestic product have not significant relationship to the capital adequacy ratio. The impact of return on assets, return on equity, credit risk, loan to assets ratio and leverage ratio significantly impacted to the capital adequacy ratio. The liquidity ratio and gross domestic product have not significant impact to the capital adequacy ratio.