THE EFFECT OF LIQUIDITY ON PROFITABILITY OF MICROFINANCE COMPANIES IN NEPAL
| dc.contributor.advisor | Asso. Prof. Dr. Kapil Khanal | |
| dc.contributor.author | Rita Thapa | |
| dc.date.accessioned | 2025-01-28T09:16:36Z | |
| dc.date.available | 2025-01-28T09:16:36Z | |
| dc.date.issued | 2024 | |
| dc.description.abstract | Many institutions worldwide lack a formal and suitable financial policy on the administration and management of liquidity. For financial institutions experiencing fastpaced growth like microfinance banks, the establishment of norms and policies to administer cash and liquidity is nonetheless crucial for the institutional viability as much in the short term as in the long term. This study sought to establish the effect of liquidity on profitability of microfinance companies in Nepal. The population of the study was comprised of all 65 microfinance companies in Nepal operating in the years 2015 to 2022. Fora microfinance bank to qualify it needed to have been in operation during the whole period of the study and therefore institutions that were not in operation in the wholeperiod of study were eliminated Secondary data was used in conducting the study. The study involved secondary data collection of the return on assets, to measure profitability and the ratio of loans to deposits to measure liquidity during a specific year. The study used secondary data obtained from Central Bank of Nepal, annual supervision reports and Association of Microfinance institutions annual publications. The study used descriptive statistics and regression analysis to establish the relationship between the study variables. The response rate was 67% that is a total 3 out of 65 licensed microfinance banks in Nepal that satisfied the data collection criteria. The study found out that there is a weak negative relationship between liquidity and profitability of microfinance banks in Nepal. Liquidity was found to be one of the determinants of profitability of Microfinance Banks in Nepal. The study recommends that the finance managers of microfinance banks maintain optimal levels of liquidity in order to remain profitable. Key Words: Capital Adequacy Ratio, Operation Efficiency, Liquidity Ration, Asset Quality, Return on Asset | |
| dc.identifier.uri | https://hdl.handle.net/20.500.14540/23870 | |
| dc.language.iso | en_US | |
| dc.publisher | Shanker Dev Campus | |
| dc.title | THE EFFECT OF LIQUIDITY ON PROFITABILITY OF MICROFINANCE COMPANIES IN NEPAL | |
| dc.type | Thesis | |
| local.academic.level | Masters | |
| local.affiliatedinstitute.title | Shanker Dev Campus | |
| local.institute.title | Faculty of Management |