Impact of Liquidity on Profitability of Nepalese Commercial Banks

Abstract

ABSTRACT The objectives of research are to examine the current position of the liquidity and profitability of a commercial bank in Nepal, to analyze the relationship between liquidity and profitability of a commercial bank in Nepal and to examine the any impact of the liquidity toward profitability of a commercial bank in Nepal. Descriptive research design is for the achievement of objectives on related to the current status of the variables. Casual comparative research design for achievement of objective two and three for achievement of objectives two and three related to the relationship and impact independent and dependent variables is used. All the commercial bank in Nepal are the population of the research and 3 commercial bank are the selected using judgmental sampling because of the one is joint venture bank, one is private bank and one is government bank selected under studies. Data are secondary nature and collected from the annual report of the concern bank. Financial and statistical analysis is done for the achievement of the objectives. The finding of the studies are the current status of the variables of the research are fluctuating nature because the value of the minimum is very low and maximum is very high and the different between minimum with mean and maximum with mean is very high. The standard deviation of the series of data is very high, the high standard deviation represent the fluctuation of the data is high. The relationship between assets quality, credit deposit and cash deposit with return on assets is positive but not significant. Leverage and return on assets relationship is positive and significant. Assets quality and return on equity relationship is negative with not significant. Credit deposit and leverage has negative and significant relation to the return on equity. Cash deposit and return on equity relationship is positive and significant. The impact of assets quality and credit deposit to the return on assets is negative but not significant. Cash deposit positive impact to the return on assets but not significant. Leverage has positive impact with significant to the return on assets. Assets Quality, Credit Deposit Ratio and Leverage has negative and not significant impact to the return on assets. Cash deposit ratio has positive and but not significant impact to the return on equity. Keywords: Assets Quality, Credit Deposit Ratio, Cash deposit ratio, Leverage and Profitability