Determinants of Investment of Nepalese Commercial Banks

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