The Impact of Corporate Governance on the Performance of Nepalese Commercial Banks

Abstract

This study aimed at finding the Impact of Corporate Governance on the Performance of Nepalese Commercial Banks. The descriptive research design has been used for this study. This study is based on both primary and secondary data.Primary data and information has been collected through questionnaires and secondary data and information has been collected from annual reports of individual bank,Nepal Rastra bank supervision report, SEB ON,Nepal Stock Exchange(NEPSE) and the financial report of respective bank, researches, journals, unpublished thesis reports,newspapers, internet and websites etc.The sample data of six commercial banks for the period 2006/7-2016.have been analysis using regression model. In this study arithmetic mean, standard deviation, correlation and multiple regression analysis has been used by using SPSS (statistical package for social science) and excel. The required data are obtained from the sample banks annual reports. Return on Equity(ROE)and Return on Assets(ROA) were dependent variables while Board Size(BS), Capital Adequacy Ratio(CAR), Non Performing Loan(NPL) and Leverage(LEV)have been taken as independent variable. The correlation analysis shows there is negative relationship of ROE with all independent variables.Similarly,there is negative relationship of ROA with BS, LEV and NPL and Positive relationship with CAR. The Regression between ROE and other indicators are found to be significant for most of Banks. It shows that they individually influence a lot.There can be other factors which influence the ROE of the organization.Similarly, the regression between ROA and some other indicators found significant and some other indicators found insignificant. It shows that some indicators influence a lot and some influence less. Based on the findings, its hows that majority of the commercial banks have followed best corporate governance practice and some other banks have not followed corporate governance principles . Therefore,they need to follow corporate governance principles strictly.