The Determinants of Commercial Bank’s Liquidity Risk in Nepal

Abstract

A strong liquidity position of banking industry is of paramount importance for the smooth functioning of the economy. The failure of the bank to manage its liquidity results to liquidity risk which further increases the probabilities of default in the banking industry.This paper aims to examine the form and pattern of liquidity risk in Nepalese commercial banks.The study is an attempt to study the determinants influencing liquidity risk of banks taking into consideration the target population as the Nepalese Commercial Bank for period covering fiscal year 2015-16 till 2019-20. To assess the impact of the varied determinants on the liquidity risks of the banks, various statistical models including econometric model (regression model) is applied to diagnose date to meet the specific objectives of research.The key findings stated that there is significant relation between numbers of variables that impacts on the liquidity performance and liquidity risk of Nepalese commercial banks.