FINANCIAL PERFORAMNCE ANALYSIS OF DEVELOPMENT BANK

Abstract

This research delves into the financial performance of Nepalese development banks, employing a meticulous examination through a blend of descriptive and causal research design. Initially focusing on a population of 17 development banks, the study strategically narrows its scope to four specific institutions, facilitating a nuanced and targeted analysis. The core of the research relies on a ten-year historical dataset compiled from annual reports, utilizing predominantly secondary data. Employing a sophisticated combination of statistical and financial tools, the analysis centers on the impact of Cash Reserve Ratio (CAR), Credit to Deposit Ratio (CD ratio), and Asset Utilization (AU) on key profitability indicators, namely Return on Assets (ROA) and Return on Equity (ROE), with SPSS software aiding in detailed examinations. Selected independent variables, including Cash Reserve Ratio, Credit to Deposit Ratio, Non-performing Loan, Net Profit to Total Loan and Advance Ratio, and Interest Income to Total Loan and Advance Ratio, are thoughtfully chosen to encompass multifaceted aspects of financial performance. The findings showcase a substantial influence of these variables on ROE, underscoring their significance in shaping equity-related dimensions of development banks. Conversely, an insignificant impact on ROA reveals nuanced intricacies in overall asset management. This research contributes a nuanced understanding of financial dynamics within the Nepalese development banking sector, offering valuable insights for strategic decision-making and laying the groundwork for informed and targeted interventions in the industry. Keywords: Development Bank, Financial Performance, Liquidity