A Comparative Study of Financial Performance and CSR of Commercial Banks in Nepal

Abstract

ABSTRACT Bank and financial institutions (BFIs) are major backbone for any economy. The mediator for usage of fund and sources of fund is connected by the bank and financial institution. Banks play an important role in the economic development of the country. Bank provide investment loans and lines of credit to entrepreneurs, small businesses and large corporations. Financial institutions provide capital to the entrepreneurs for the development of industry, trade and business by investing saving collected as deposits. They also providing good services to their customers, facilitating their economic activities, thus, integrated and speedy development of the country is only possible. The analysis was done with the help from the data that were collected from annual report and other related sources. SPSS was used for the analysis of the data that were collected. For the comparative financial analysis and CSR of selected banks the framework was constructed using leverage position, liquidity status and CSR as the independent variables and financial performance measured in banking profitability as a dependent variable. For the analysis, data of 10 years was considered. The essential facts were choosen and presented in the form of table and figures. As a financial analysis, analysis were done in the form of return on assets, return on equity, net interest margin, debt to equity ratio, liquidity and amount invested on corporate social responsibility. Regression analysis was utilized in this study to evaluate the hypothesis. The independent factors that influence result variability are listed in this section, together with the percentage of the dependent variable variability that each independent variable contributes to explaining. A list of the factors that are important in understanding the variability of the dependent variable is also included in this. To investigate the relationship between the independent variables and the dependent variable, a linear regression analysis was carried out. The banking performance has the significant influence by the all three variables (i.e. leverage, corporate social responsibility and the liquidity). But in the context of the Nepalese commercial bank, the leverage has the highest impact on the banking performance followed by the liquidity and corporate social responsibility. The liquidity has the positive impact on the net interest margin in the context of the net interest margin but in return on equity and assets has the negative. The leverage ratio has the highest impact on the commercial bank. The study fosters for the better leverage for better banking performance and proper liquidity for the better banking performance compare to the social responsibility.