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