Determinants of Investment of Nepalese Commercial Banks
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Department of Management
Abstract
The purpose of the study to examine the factors that determinant of investment of Nepalese
commercial banks. The study is based on the secondary data which were gathered for 5 commercial
banks in Nepal for the period 2011/12 to 2020/21, leading to the total of 50 observations. The
secondary data have been obtained from concerned banks annual reports. The descriptive, corelational
and casual comparative research design has been employed. In this study, five
commercial banks are taken as sample out of total population of 27. The dependent variable used
in this study is investment and independent variables used are deposits, size of the firm and net
profit. The correlation analysis is done by using person’s correlation coefficient. This correlation
matrix, investment is taken as a dependent variable and total deposit, total asset and net profit are
taken as an independent variable. Means, standard deviations, and C.V, are used to examine the
trends of variables of sample commercial banks which are selected for this research. Descriptive
statistics of dependent and independents variables of selected commercial banks for the study
period of ten fiscal years. Dependent variables is log of total investment (Ln Inv ), and independent
variables are log of total deposit (Ln TD), log of total asset (Ln TA). log of net profit (Ln
NP).Pearson’s correlation model is used to show the relationship among the variables and 2-tailed
test is used to measure the significance. The results, all variables have statistically significant
because their p-value is less than 0.01 significant level. The regression model reveals that there is
positive relationship of investment with deposit and is statistically insignificant. Size of the firm
have negative relation with the dependent variable and indicates statistically significant. In the
same way profitability has the positive relation with the investment but it is also statistically
significant. It states that when the profit of firm increases then the investment will also rise. Deposit
has the positive relationship with the investment which indicates that as deposits increases the
investment amount get increases and is statistically significant.
KEYWORDS: Investment, Deposit, Size and Profit