FINANCIAL PERFORMANCE ANALYSIS OF DEVELOPMENT BANKS IN NEPAL
Date
2024
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Shanker Dev Campus
Abstract
This study aims to find the Analysis of Financial Performance of Development Banks in
Nepal. For this purpose, four banks are selected namely Muktinath Bikash Bank Limited,
Jyoti Bikash Bank Limited, Garima Bikash Bank Limited, Kamana Sewa Bikash Bank
Limited as a sample of the study during period 2013/14-2022/23. The secondary data are
used to examine the analysis of financial performance of selected banks. The data used in
this study are obtained from published annual reports and official websites of the sample
banks, and NRB website. The tools used on the study are statistical tools, which are
descriptive statistics, correlation coefficient and regression analysis. Return on assets and
Return on equity are the selected dependent variables while credit risk, liquidity risk,
operating expenses, capital adequacy ratio were the independent variables. The finding of
the study show, the correlation analysis conducted in this dissertation there is strong and
statistically significant negative correlations were found between Return on Assets (ROA)
and Operating Cost as well as a notable negative correlation between Return on Equity
(ROE) and Credit Risk. There are no statistically significant correlations between Return
on Assets (ROA) and the examined variables, including Liquidity Risk, Capital Adequacy
Ratio, and Credit Risk. Similarly, no statistically significant correlations were found
between Return on Equity (ROE) and Liquidity Risk, Operating Cost, or Capital
Adequacy Ratio, highlighting the unique significance of Credit Risk in impacting ROE.
The regression analysis conducted in this study revealed that Return on Assets (ROA)
does not exhibit statistically significant impacts from the examined variables, including
Liquidity Risk, Capital Adequacy Ratio, and Credit Risk. This suggests that ROA's
performance in Nepalese development banks is independently influenced, with Operating
Cost having a prominent impact. Additionally, the regression analysis indicated that
Return on Equity (ROE) is not significantly impacted by Liquidity Risk, credit risk and
Capital Adequacy Ratio. There is significant positive impact of operating cost on return
on equity of development banks in Nepal.