Effect of cash flow on financial performance of commercial banks in Nepal (with refrence to Civil Bank, NCC Bank and Nabil Bank)

Abstract

This study aims at examining the determinants of the effect of cash flow on financial performance of commercial banks in Nepal, Likes examine the present practices of cash flow in selected banks, examine any relationship between cash flow and financial performance and examine the effect of cash flows on financial performance. Cash is the most Liquid asset and necessary aid for any organization. Barring cash no commercial enterprise things to do can be taken place. In recent years, the declaration of Cash flows has been a phase of economic announcement of an organization. Cash Flow statement provides necessary statistics about the sources and makes use of money of the enterprise for an accounting period. The data about money waft is beneficial for the corporation in assessing its liquidity, financial flexibility, profitability and risk. Cash go with the flow record is accordingly widely used by using investors, analysts, creditor, managers and others sample has been convenience method of sampling used. The study uses secondary data for three banks, which are in the industry for more than seven years. These banks are chosen from twenty-seven commercial banks, which are currently functional in Nepal, banking industry. The data for this study is obtained from annual reports of the banks, and the annual bank report. The descriptive design, casual with quantitative approach was used to accomplish of the study Correlation and Regressions of panel data for the eight banks for the years 2071/72 to 2077/78 is analyzed using random effect model. SPSS software was used for analyzing the data. Return on Asset and Return on Equity are the selected dependent variables while CFFOA, CFFIA, CFFFA, Bank size, leverage Ratio, Equity Multiplier were the independent variables. Results show that model first EM and CFFIA is positive and insignificant with ROA. The Leverage ratio, CFFOA, CFFFA is negative and insignificant with ROA. Again, Model second Leverage ratio, firm size, and CFFIA positive and insignificant with ROE but EM is the positive and significant with ROE. Key words: Cash flow from operating activities, cash flow from investing activities, Cash flow from financing activities, return on assets, Return on Equity, Firm size, Leverage Ratio, and Equity Multiplier.