THE IMPACT OF CREDIT RISK MANAGEMENT ON THE PROFITABILITY OF NEPALESE COMMERCIAL BANKS

Abstract

ABSTRACT Purpose of Research: The main purpose of this study is to analyze the impact of credit risk management on the profitability of Nepalese joint venture commercial banks. Methodology: This study is based on secondary data of joint venture banks for the period of 2009/10 - 2015/16. The data are obtained from annual report of concerned banks. The descriptive and causal comparative research design has been used for the study. The relationship between profitability and credit risk has been analyzed with the help of the multiple regression technique from SPSS- 18 version. Return on assets, return on equity and net interest margin are used as dependent variables measures profitability and capital adequacy, assets quality, management soundness, earnings, and liquidity ratios are selected as independent variables measures of credit risk management. Major Findings: Thus, this study concludes that liquidity is the major factors affecting the profitability of joint venture commercial banks in Nepalese context. Research Limitation: The major limitation of this research is that only joint venture commercial bank annual reports for the period 2009/2010 to 2015/2016 have been taken in order to address the subject under investigation. The predictors of profitability have been limited by CAMEL. Implication: The findings of the study is valuable for bank managers, board of directors and regulator in assessing the strengths and weakness of the banks in the management of credit risk, its likely impact on performance and where the banks are heading about in the future. Keywords Bank, Impact, Profitability and CAMEL.