Commercial Banks In Nepal Research Articles

IMPORTANCE OF INTERNAL CONTROL SYSTEMS ON DETECTION AND PREVENTION OF FRAUD IN COMMERCIAL BANKS OF NEPAL

This research aims to study the importance of internal control systems to detection and prevention of fraud in commercial banks in Nepal. Advanced authentication techniques, vigilant monitoring for questionable activity, frequent staff education and awareness campaigns, and robust encryption for confidential information are all part of the process of identifying and preventing fraud. Effective internal control mechanisms are essential to the identification and aberrance of fraud in financial organizations. This study used descriptive research design to interpret the data. Using simple random sampling Ten commercial banks were selected as sample out of total Twenty commercial banks. Three level staff officer, manager, and executive were chosen on the study. Structured questionnaire was distributed to Fifty respondents but only 48 were collected and used in the study. Chi square test was applied to analyze the data. Findings of this study found that fraud in the organization is done by concealed hand and inefficient allocation of duties and authorities can not detect and prevent the fraud in commercial banks in Nepal. To detect and prevent the fraud the commercial banks need to apply effective internal control systems, allocate the duties and authorities in systematic way.

Factors Affecting Customer of Mobile Banking Services at Commercial Banks in Nepal

Factors Affecting Customer of Mobile Banking Services at Commercial Banks in Nepal

Assessment of Risk Strategies in Banking Sector of Nepal

This article examines the impact of strategies in mitigating the risk in commercial banks of Nepal. First the paper introduces the risk in the financial institutions and then discusses the types of risks in the banks that rely on the IT systems for the operations and services. Besides, it forwards some strategies that can help the banking sector to reduce the risk and to promote the security from the attackers. I have used the mixed method of research design and have massively used the secondary data to assess the impact of the tools and techniques employed in mitigating the risk in the banking sector of Nepal. Despite the reliance on the secondary materials for information, the paper is analytical and critical contribution to the existing knowledge on the subject i.e. the risk management in the financial institutions of Nepal. The major objective of the paper has been to scrutinize the current risks faced by the banks in Nepal and the process of reducing the risks as adopted by the financial institutions in general. The finding of the study is the spread of awareness and updating the IT systems by the banks can help to protect the systems from the intruders and the cyber security must be strengthened to let the financial institutions feel safe.

Effect of Capital Adequacy, Bank Size and Lending Interest Rate on Profitability of Commercial Banks in Nepal

Purpose : This study aims to examine the effect of capital adequacy, bank size and lending interest rate on the profitability of commercial banks in Nepal.Methods: This research used a combination of descriptive and causal comparative research design using secondary source of data obtained from the annual report of corresponding commercial banks. A panel data from the fiscal year 2013/14 to 2022/23 were obtained from six randomly selected commercial banks. Results: The capital adequacy ratio exhibits a significant positive impact on ROA signifying that a robust capital base strengthens financial stability, lowers funding costs, and promotes profitable lending operations. The analysis reveals that bank size has negative effect on ROA but the effect is insignificant suggesting that variations in size do not substantially influence profitability, implying that other determinants are more critical in shaping financial performance. Furthermore, the results indicate a significant negative effect of lending interest rates on return on assets (ROA), which are attributed to factors such as increased borrower repayment capacity, reduced loan demand, higher non-performing loan risks, and elevated funding costs negatively impact overall bank profitability Conclusion: Capital adequacy ratio plays a critical role in increasing bank profitability. Other factors such as bank size and lending interest rates need to be managed to optimize financial performance. Future research is necessary to explore these relationships in more diverse banking environments and consider additional variables to further understand the drivers of bank profitability.

Impact of customer satisfaction on commercial banks in Nepal: Insights from a survey-based study

This study investigates how various service quality dimensions affect customer satisfaction in commercial banks across Nepal. The objective of this study is to examine the impact of key service quality dimensions (responsiveness, empathy, assurance, communication, and overall service quality) on customer satisfaction in commercial banks in Nepal. A survey-based quantitative approach was employed, collecting data from 399 customers in Nepal. The study utilizes multiple linear regression analysis and hypothesis testing to determine the relationship between these factors and customer satisfaction. The results indicate that communication, assurance, and service quality positively influence customer satisfaction, with a moderate mean score of 2.317949 out of 5 and moderate variability (SD = 0.479612). These three factors are key contributors, accounting for 41.5% of the variation in satisfaction, whereas empathy and responsiveness have weaker or insignificant impacts. The study concludes that enhancing communication and service quality is crucial for improving customer satisfaction, which is essential for sustainable growth in Nepal’s financial sector.

Risk and Return Analysis of Stocks of Nepalese Commercial Banks

This research article analyzes the impact of risk and return of Nepalese commercial bank stocks on portfolio returns to assist investors in making informed investment decisions. It aims to examine the effects of individual bank stock returns, risks, market return, and market risk (beta) on overall portfolio performance. The study utilizes a quantitative approach, employing descriptive statistics, comparative (trend) analysis, correlation analysis, and hypothesis testing. Secondary data was collected from 18 commercial banks in Nepal, including post-merger banks, covering the fiscal years from 2015/16 to 2021/22. Statistical tools such as SPSS and EViews were used for analysis. The findings indicate that investors seeking higher returns might consider Prabhu Bank, which offers high mean returns but also comes with higher volatility. In contrast, risk-averse investors may prefer banks like NMB and Nabil, which provide lower mean returns but more stable performance. Notably, this research contributes to the understanding of the risk-return relationship in the context of 18 Nepalese commercial banks post-merger, providing new insights for investors. This study highlights the importance of analyzing individual bank stocks and their associated risks for portfolio construction. By understanding the dynamics of risk and return, investors can optimize their investment strategies and enhance portfolio performance. Overall, this research fills a gap in existing literature by focusing on the Nepalese commercial banking sector and its implications for investor decision-making. The insights gained from this study can guide investors in navigating the complexities of the stock market, ultimately leading to more informed and strategic investment choices. Future research could expand on this work by exploring additional factors influencing stock performance and investor behavior in the Nepalese context.

Factors affecting employee retention: An empirical study in Nepalese commercial banks

This paper aims to identify the factors affecting employee retention in Nepalese financial institutions, especially commercial banks. Through a questionnaire, the primary data were collected from 400 respondents. The study is based on a dichotomous and 5-point Likert scale questionnaire. The collected data were analyzed using SPSS and structural equation modeling (SEM). SEM smart PLS-4 is used to examine the association between the dependent and independent variables. The results indicate that company image/goodwill, employee benefits, job satisfaction, organizational performance, recruitment and selection, and work environment and culture have a relatively significant relationship with employee retention. Among them, organizational performance was found to be highly significant among all other variables. However, labor unions, leadership support, performance appraisal, training and development, and work-life balance did not have an association with employee retention. The study helps HR managers to formulate appropriate policies and guidelines to retain employees in Nepalese commercial banks. Likewise, it provides a valuable empirical contribution by analyzing which factors affect employee retention in commercial banks in Nepal using a direct SEM model. It also shows which factors play a major role in employee retention.

Impact of Ergonomics Practices on Commercial Banks’ Employee Performance in Nepal: Evidence from Structural Equation Modeling

Background: Organizations today face multiple challenges to maintain the health and performance of employees. Ergonomics is a strategy to reduce occupational disease rates and improving general working conditions for employees in order to improve productivity. Despite the importance of ergonomics in workplace, research in this field is needed to be explored more. It is well practice in world but still new concept in Nepal. Objective: The objective of the study is to investigate “Impact of Ergonomics Practices on Commercial Banks’ Employee Performance in Kathmandu Valley”. Method: The Exploratory research design was adopted for the study with the foundation of Theory of Ergonomics. The population of this study consists of commercial banks’ employee in Kathmandu valley. Under the probability sampling technique, simple random sampling using structured questionnaire 203 responses are collected with the help of KOBO toolbox. SEM is used to analyse the impact of ergonomics practice in commercial Banks of Nepal. The data was statistically examined using descriptive and inferential analysis utilizing the structured questionnaire approach and the KOBO toolbox. Result: This study finds that ergonomics practice in Nepalese commercial bank as at infant stage. Physical ergonomics factor such as, work design area, thermal comfort, furniture, work hours, lighting has significant effect on employee performance respectively. Physical exhaustion, mental stress, back pain are most frequent problems faced by bankers. Mitigation over this problem by designing employee compatible workplace and adopting ergonomics intervention reduce mental stress, physical exhaustion, back pain and fatigue and motivates the employee and increase their performance. Conclusion: Ergonomics adoption on workplace to enhance the productivity level by reducing health related problem and building employee friendly work environment is milestone to enhance employee performance. Based on the finding and conclusion, the study recommends that work area design, thermal comfort, space, lighting should be considered while designing employee compatible workplace to enhance employee performance in Nepalese Commercial banks’ employee. Paper Types: Research Paper Keywords: Ergonomics, Employee Performance, Employee productivity, Employer health issue, Banks. JEL Classification: C13, C83, I12, J28, J81

Credit Risk Management and Profitability of Nepalese Commercial Banks

Banks are an essential component in the economy in the process of creating economic growth in both developed and developing countries. In order to contribute to its commitment to promote growth, banks should be able to lock in on the stability of their financial performance. This study has examined the relationship of credit risk management on performance of Nepalese commercial banks. The descriptive, Correlational research design and review have been adopted for the study. The pooled data of ten commercial banks out of total population of twenty commercial banks operating up to January 2024 has been analyzed. The findings indicate that specific financial indicators, such as credit to deposit ratio, non-performing loan, and interest spread rate, play crucial roles in influencing ROA and ROE. Major issue on non-performing loan and impairment cost were highlighted. Identified that gross domestic product growth rate has an insignificant positive impact on profitability of commercial banks in Nepal. These insights contribute to a deeper understanding of the dynamics within the banking sector, offering valuable implications for stakeholders and policymakers.

Impact of Strategic Planning on Organizational Performance and Survival of Nepalese Commercial Banks

This study investigates the impact of strategic planning on organizational performance and survival of Nepalese commercial banks. Organizational performance is the dependent variable. The selected independent variables are organizational structure, environmental scanning, strategy implementation, strategy formulation, strategy evaluation and control. The primary source of data is used to assess the opinions of the respondents regarding the strategic planning and its impact on survival and performance of commercial banks in Nepal. The study is based on primary data of 16 commercial banks with 125 respondents. To achieve the purpose of the study, structured questionnaire is prepared. The correlation coefficients and regression models are estimated to test the significance and importance of strategic planning on performance and survival of Nepalese commercial banks. The study showed that organizational structure has a positive impact on organizational performance. It indicates that better organizational structure is associated with sound performance and survival of banks. Similarly, environmental scanning has a positive impact on organizational performance. It implies that prior environmental scanning stimulates the organizational performance. Similarly, strategy implementation has a positive impact on organizational performance. It reveals that proper strategy implementation drives the organizational performance. The study also showed that strategy formulation has a positive impact on organizational performance. It indicates that feasible and suitable strategy formulation stimulates the organizational performance. Furthermore, strategy evaluation and control has positive impact on organizational performance. It indicates that proper and on time strategy evaluation and control drives the organizational performance.

Drivers of Service Quality and Customer Satisfaction in Kathmandu Valley

Customer satisfaction is essential for businesses to encourage them to share positive responses in buying products. It stands as a crucial factor in determining long-term success of any organization reflecting the extent to which their offerings satisfy customer expectations. The economic progress and business success rely on customer satisfaction affected by the empathy, assurance, responsiveness, tangibility, reliability etc. especially in banking sector. Therefore, this study examines how bank customers perceive service quality and impact on their satisfaction. It utilizes a descriptive and causality research design to explore the relationship between drivers of service quality and customer satisfaction based on primary survey data from Kathmandu valley. This paper concludes reliability, assurance, tangibility, empathy, and responsiveness as service quality drivers play a significant role in shaping customer satisfaction within the banking sector. Notably, tangibility, assurance, and empathy stand out as key influential drivers in determining customer satisfaction level in commercial banks within Kathmandu valley. The significance of this research lies in its relevance to policymakers in the banking sector, urging them to develop and execute diverse bank policies aiming to enhance customer satisfaction, thereby fostering the business and economic success of commercial banks in Nepal.

Impact of Financial Risk and Macro-Economic Variable on Stock Return: Evidence from Commercial Banks of Nepal

This paper examines the impact of financial risks and macroeconomic variables on the stock returns of commercial banks in Nepal. The study focuses on four main types of financial risks: credit risk, market risk, capital risk, and liquidity risk, alongside bank size, return on assets (ROA), and dummy variables for COVID-19 and earthquake impacts. Additional macroeconomic variables include economic growth, inflation, and interest rates. Using panel data regression on yearly data over 11 years for 20 commercial banks, the study investigates these factors' causal impacts on stock returns. The findings indicated that capital risk and liquidity risk negatively affect stock returns, suggesting that higher capital adequacy ratios limit high-risk, high-return investments, and higher liquidity risks lead to financial instability. Credit risk and market risk, however, did not impact stock returns. Larger banks faced negative stock returns, likely due to management complexities and inefficiencies. Economic growth and inflation positively impacted stock returns, reflecting economic optimism and increased activities, while higher interest rates negatively affected returns by increasing borrowing costs. The COVID-19 pandemic had a positive impact due to increased stock market activity amid limited investment opportunities, whereas the 2015 earthquake negatively affected returns as efforts focused on rebuilding. These insights underscore the need for robust risk management and consideration of broader economic conditions in investment and policy decisions.

Identifying the Determinants of Dividend Payout Ratios in Nepalese Commercial Banks

The banking sector in Nepal has experienced significant growth since its formal inception, playing a crucial role in the country's economic development. This study aims to explore the factors influencing the dividend payout ratio in commercial banks of Nepal. The research is based on secondary data to analyse the commercial banks operating in Nepal. Quota sampling was employed to select seven banks, and data were analysed using descriptive and analytical research designs, along with statistical tools like regression analysis. The findings reveal that liquidity ratio and bank size have a significant positive impact on dividend payout ratios in Nepalese commercial banks. However, variables such as leverage, capital adequacy ratio, and profitability ratios exhibit insignificant relationships. Additionally, significant differences in dividend payout ratios, return on assets, leverage, and capital adequacy ratio were observed among different bank types. Higher liquidity ratios and larger bank sizes correspond to higher dividend payout ratios, indicating their pivotal role in shaping dividend policies in Nepalese commercial banks. Banks and financial institutions may focus on managing liquidity and expanding their size to enhance the dividend payout ratio.

Factors Affecting the Liquidity Risk of Commercial Banks in Nepal

Level liquidity is an important factor that helps the growth and survival of commercial banks. This research aims to show the factor affecting the liquidity risk of commercial banks in Nepal. The panel data were used to analyze and find the results from the period 2017 to 2021. Secondary data are collected from the annual report of commercial banks. Banks’ internal factors bank size, capital adequacy ratios, non-performing loans, return on assets, return on equity, and external factor gross domestic product was used as independent variables. The dependent variable of the research is the liquidity ratio. A descriptive research design has been used to explain the data. A convenient sampling technique was used to select the 16 commercial banks as a sample from the population of 26 banks. Various statistical methods are used to describe the data and to find the result from the 80 observations. The result shows that there is a significant and negative relationship between bank size and non – performing loans with the liquidity of commercial banks in Nepal, but GDP, ROA, and ROE have significant positive effects on liquidity. To maintain the liquidity level commercial banks, need to minimize the non – performing loans. It is crucial to take into account the size of the bank, the nature of the crisis, the regulatory environment, the interconnection of the financial sector, market perception, and contagion risk when large banks have a negative impact on liquidity. Knowing these elements will make it easier to find suitable answers to the liquidity issue and lessen the effects it has on the larger financial system.

Effects of Non-Performing Loan and Operational Efficiency on Profitability of Nepalese Commercial Banks

This study examines the effects of non-performing loan and operational efficiency on profitability of Nepalese commercial banks. Return on asset and return on equity are selected as the dependent variables. Similarly, loan to deposit ratio, capital adequacy, loan loss provision, non-performing loan, operating income and operating expenses are selected as the independent variables. This study is based on secondary data of 15 commercial banks with 105 observations for the study period from 2015/16 to 2021/22. The data were collected from Banking and Financial Statistics published by Nepal Rastra Bank(NRB), annual reports of the selected commercial banks and reports published by Ministry of Finance. The correlation coefficients and regression models are estimated to test the significance and importance of loan to deposit ratio, capital adequacy ratio, loan loss provision, and non-performing loan, operating income and operating expenses on the profitability of Nepalese commercial banks. The study showed that that loan loss provision ratio, non-performing loan ratio and capital adequacy ratio are the positive impact return on assets (ROA). It indicates that higher the loan loss provision ratio, non-performing loan ratio and capital adequacy ratio, higher would be the bank return on assets (ROA) of commercial banks in Nepal. Similarly, the study also shows that loan to deposit ratio, operating income ratio and operating expenses ratio have a negative impact on return on assets (ROA). It indicates that higher the loan to deposit ratio, operating income ratio and operating expenses ratio lower would be the return on assets of Nepalese commercial banks.

Factors affecting Stock Price Behaviour of Commercial Banks in Nepal Stock Exchange

This research investigates how factors such as Dividends Per Share (DPS), Earnings Per Share (EPS), Price-Earnings Ratio (PER), and Net Worth Per Share influence the Market Price Per Share of commercial banks in Nepal. The study analyzed the panel data from four commercial banks, consisting of 40 observations, to evaluate the correlation and influence of factors affecting stock price movements. In this study, secondary panel data covering ten years (2070/2071-2079/2080) has been used. Based on the results of this investigation, there is a significant positive correlation between the Market Price Per Share and the Dividends Per Share, Price-Earnings Ratio, and Net Worth Per Share but a negligible effect of Market Price Per Share and Earnings Per Share of commercial banks.

Green Banking Initiatives: Policy and Practices in Commercial Banks of Nepal

Environmental and social (E&S) risk management has grown in key aspects of sustainability in banks and other financial institutions these days. A socially inclusive, climate-friendly and green banking system is only possible with the effective management of E&S risk in their business transactions. This study assesses the present implementation status of sustainability within commercial banks in Nepal, by examining their adherence to the environment and social risk (ESRM) guidelines issued by Nepal Rastra Bank (NRB). Using a descriptive research design, the study utilizes ESRM reports published by NRB in 2078/79 and 2079/80. The study examines the present state of ESRM guideline implementation across three key aspects of policy formation, training and development activities for bank employees, and incorporation of environmental and social risks within the core strategies of commercial banks. The result found a satisfactory level of implementation of ESRM guidelines. The policy formulation and governance indicators are almost realized and other indicators have satisfactory and progressive levels of operation in the banks. Effective implementation of sustainable guidelines and initiatives will be accomplished innovative financial instruments that incentivize green investments and support climate-resilient practices can further expedite the transition to a sustainable banking landscape. Overall, this study offers valuable insights into the current state of ESRM in Nepal's commercial banks, shedding light on the progress that can pave the way for a more sustainable and green financial system in Nepal.

EFFECT OF NON-PERFORMING LOANS ON THE FINANCIAL PERFORMANCE OF NEPALESE COMMERCIAL BANKS

This research has been conducted to show the effects of non-performing loans on the financial performance of commercial banks in Nepal. Both the macroeconomic variables and bank-specific variables are used in the study. Descriptive and analytical research design has been used to analyze and interpret the results. Secondary data has been collected from the annual reports of banks for bank-specific variables and macro-economic variables are collected from the economic survey. Five-year data was collected from the twenty commercial banks from 2015/16 to 2019/20. Banks are selected using the convenient sampling technique. Data are interpreted and analyzed using inferential (Correlation and Multiple Regression) statistics. The study takes two dependent variables (ROA and ROE) and five independent variables (CAR, CRR, Size, GDP, and Inflation). The findings show that there are statistically positive and significant effects of size and inflation on ROA and similar effects of cash reserve ratio and inflation on ROE. The result also shows that CRR and CAR have a negative but statistically significant effect on ROA and ROE. Other independent variables GDP and CAR have nominal effects on the financial performance of commercial banks in Nepal. Key Words: Capital adequacy, Cash reserve, financial performance, ROA, ROE.

Human Resource Development and Employee Commitment in Nepalese Commercial Banks

The level of employee commitment is a significant issue for many firms throughout the world. As a result, many firms are using a variety of human resource development techniques to increase employee commitment. Employee dissatisfaction has been voiced in the field of compensation, which is characterized by unequal rewards, inadequate compensation and lack of job security. The purpose of this research is to focus on analyzing the relationship between HRD dimensions and employees' commitment working across various commercial banks in Nepal. The study's independent variables were Training, Compensation, Job Security, and Reward. The dependent variable was employee commitment. The descriptive research design was used. The population of the study was 46408 employees and a simple random sample technique was used to choose 396 employees from 11 commercial banks under probability sampling method. Data were collected using a standardized questionnaire on Likert Scale with 1 specifying a strongly disagreement and 5 a strongly agreement. Descriptive statistics, correlation, and regression analysis were used to analyze the data. Cronbach's Alpha had been used to test for reliability. Reliability is acceptable with a Chronbach's Alpha rating of 0.76 on an average. IBM, SPSS version 26 was used to analyze the data. The study concluded that employees' Training, Compensation and Job Security had a favorable and significant relationship with employee commitment, Reward had a negative but significant impact on Employee Commitment. The study recommended that the policy makers and BOD of Nepalese Commercial banks should design an effective welfare policy to enhance commitment of employees.

Capital Structure and Profitability of Commercial Banks in Nepal

The study intends to look into how capital structure affects a Nepalese commercial bank's profitability. The statistical analysis of the study includes the secondary data. Using software for analysis, Descriptive and a casual comparative analysis has conducted by gathering data from bank websites and using correlations and multiple regression models for hypothesis testing. Out of the entire population, 12 bank has taken as a sample for the study. The capital structure and profitability have been investigated as a cause and effect relationship using a casual comparative research design. In this study NIM is used as dependent variables, and leverage ratio, bank size, liquidity ratio, and capital ratio are independent variables. As a statistical tool, the following tools are used: mean, standard deviation, correlation, multiple regression model, and hypothesis testing. Excel and SPSS are both used to evaluate those variables. Leverage Ratio has a negative and significant impact with NIM on Nepal's commercial banks. Bank Size has remained negatively and insignificantly impacted with NIM. The Liquidity Ratio shows significantly and positively affects with NIM. The capital ratio has a significant and favorable impact on NIM. However, Banks should value the significance of other variables.