Effect of Credit Risk Management on Financial Performance of Nepalese Commercial Banks
Year: 2024
Type: article
Abstract: The study aims to investigate the effect of credit risk management on the financial performance of Nepalese commercial banks. For this study, secondary data and descriptive and causal-comparative research methodologies were employed. The E-view-12 student version was used to evaluate the 210 observations of balanced panel data from 15 commercial banks from FY 2010–11 to FY 2022–23. The capital adequacy ratio and credit-to-deposit ratio were shown to have statistically significant and positive coefficients. Both the capital adequacy ratio and the credit-to-deposit ratio have a substantially beneficial effect on the profitability of Nepal's commercial banks, according to the considerable positive coefficients. Therefore, banks should maintain an appropriate capital reserve to absorb a reasonable amount of losses and prioritize improvements in efficiency for expanding their lending and investment activities to enhance the bank’s financial stability and performance. KEYWORDS: Credit to Deposit ratio, Capital Adequacy Ratio, Non-performing Loan Ratio, Bank Size, Return on Assets.
DOI: 10.36713/epra19517
Author: Arun Singh Thakuri
Institution: Tribhuvan University
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W4405758062