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Effect of Credit Risk on the Performance of Nepalese Commercial Banks

Author

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  • Yuga Raj Bhattarai

    (Patan Multiple Campus, Tribhuvan University)

Abstract

This study has examined the effect of credit risk on performance of Nepalese commercial banks. The descriptive and causal comparative research designs have been adopted for the study. The pooled data of 14 commercial banks for the period 2010 to 2015 have been analyzed using regression model. The regression results revealed that 'non-performing loan ratio' has negative effect on bank performance whereas 'cost per loan assets' has positive effect on bank performance. In addition to credit risk indicators, bank size has positive effect on bank performance. Capital adequacy ratio and cash reserve are not considered as the influencing variables on bank performance. This study concludes that there is significant relationship between bank performance and credit risk indicators.

Suggested Citation

  • Yuga Raj Bhattarai, 2016. "Effect of Credit Risk on the Performance of Nepalese Commercial Banks," NRB Economic Review, Nepal Rastra Bank, Economic Research Department, vol. 28(1), pages 41-64, April.
    • Handle: RePEc:nrb:journl:v:28:y:2016:i:1:p:41
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    References listed on IDEAS

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    Cited by:

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    More about this item

    Keywords

    Bank; Credit; Nepalese; Performance; Regression; Risk;
    All these keywords.

    JEL classification:

    • C88 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Other Computer Software
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • H81 - Public Economics - - Miscellaneous Issues - - - Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts
    • M38 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Government Policy and Regulation
    • N25 - Economic History - - Financial Markets and Institutions - - - Asia including Middle East
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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