CREDIT RISK MANAGEMENT AND PROFITABILITY OF COMMERCIAL BANKS IN NEPAL
Date
2024
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Shanker Dev Campus
Abstract
Credit Risk Management and Profitability of commercial Banks in Nepal help to
determained is any credit institution's success or failure can be directly attributed to poor
credit risk management. The primary worry of the banks is credit risk and its
administration as credit or credits and advances are the principal kind of revenue for
them. This concentrate hence expects to look at the effect of credit risk the board on
productivity of banks in Nepal. For five years (2018-19 to 2022-23), secondary data were
gathered from Nepali commercial banks. The multiple regression analysis was used in
this study. The finding shows that all the example banks have overseen advances as well
as the nonperforming credits. The connection examination shows that credit and advance
(LA) has critical connection with non-performing credit (NPL) in 1% degree of
importance with relationship coefficients 0.466 which truly intends that there is moderate
level of positive relationship among's credit and advance and non-performing advance.
Simultaneously, credit and advance (LA) has critical connection with advance deficit
arrangement (LLP) and net benefit (NP) in 1% degree of importance. Be that as it may,
there is immaterial positive connection between's non-performing credit and net benefit.
This study recommends that Nepalese commercial banks collaborate with credit reference
bureaus in the country to thoroughly investigate the past credit worthiness records of loan
applicants in order to reduce the rate of default. Additionally, the result found that loan
and advance, non-performing loan, and loan loss provision have a significant impact on
sample banks' profitability.
Key words: Credit risk, profitability, loan & advance, non-performing loan.