What Determines the Capital Adequacy Ratio of Joint Venture Commercial Banks of Nepal? An Evidence from Panel Data Analysis
The bank with the appropriate capital adequacy ratio (CAR) is considered the more substantial bank that can meet its obligations and take risks. Thus, the bank management has to identify those factors influencing CAR. This study aims to identify the factors determining the CAR of commercial banks i...
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| Format: | Article |
| Language: | English |
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MM Edukasi
2023-03-01
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| Series: | Journal of Mathematics Instruction, Social Research and Opinion |
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| Online Access: | https://journal-gehu.com/index.php/misro/article/view/66 |
| _version_ | 1827940383145852928 |
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| author | Purna Man shrestha |
| author_facet | Purna Man shrestha |
| author_sort | Purna Man shrestha |
| collection | DOAJ |
| description |
The bank with the appropriate capital adequacy ratio (CAR) is considered the more substantial bank that can meet its obligations and take risks. Thus, the bank management has to identify those factors influencing CAR. This study aims to identify the factors determining the CAR of commercial banks in Nepal. For this purpose, this study has used annual panel data of 6 joint venture commercial banks of Nepal from 2007 to 2021. This paper's regression analysis revealed that bank-specific factors significantly determine the capital adequacy ratio.
Further, the study concluded that the financial performance measured by ROE and lending policy measured by the ratio of the total loan and advance to total assets (LTA) plays an inverse role. Liquidity LTD), management efficiency (ME), operational efficiency (OE), and the size of the bank (SIZE) play a positive role in determining the capital adequacy ratio. The bank's management can implement the findings of this paper to maintain a sufficient capital adequacy ratio. Further, the finding of this study can also be implemented by the regulatory bodies to develop policies relating to the capital requirements of commercial banks.
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| first_indexed | 2024-03-13T09:09:26Z |
| format | Article |
| id | doaj.art-fa6318a62ec34215a706f05f9e6a00ca |
| institution | Directory Open Access Journal |
| issn | 2962-7842 |
| language | English |
| last_indexed | 2024-03-13T09:09:26Z |
| publishDate | 2023-03-01 |
| publisher | MM Edukasi |
| record_format | Article |
| series | Journal of Mathematics Instruction, Social Research and Opinion |
| spelling | doaj.art-fa6318a62ec34215a706f05f9e6a00ca2023-05-27T23:03:47ZengMM EdukasiJournal of Mathematics Instruction, Social Research and Opinion2962-78422023-03-012110.58421/misro.v2i1.6666What Determines the Capital Adequacy Ratio of Joint Venture Commercial Banks of Nepal? An Evidence from Panel Data AnalysisPurna Man shrestha0Mid-West University The bank with the appropriate capital adequacy ratio (CAR) is considered the more substantial bank that can meet its obligations and take risks. Thus, the bank management has to identify those factors influencing CAR. This study aims to identify the factors determining the CAR of commercial banks in Nepal. For this purpose, this study has used annual panel data of 6 joint venture commercial banks of Nepal from 2007 to 2021. This paper's regression analysis revealed that bank-specific factors significantly determine the capital adequacy ratio. Further, the study concluded that the financial performance measured by ROE and lending policy measured by the ratio of the total loan and advance to total assets (LTA) plays an inverse role. Liquidity LTD), management efficiency (ME), operational efficiency (OE), and the size of the bank (SIZE) play a positive role in determining the capital adequacy ratio. The bank's management can implement the findings of this paper to maintain a sufficient capital adequacy ratio. Further, the finding of this study can also be implemented by the regulatory bodies to develop policies relating to the capital requirements of commercial banks. https://journal-gehu.com/index.php/misro/article/view/66Capital adequacy ratioJoint venture commercial banksBanks specific factors |
| spellingShingle | Purna Man shrestha What Determines the Capital Adequacy Ratio of Joint Venture Commercial Banks of Nepal? An Evidence from Panel Data Analysis Journal of Mathematics Instruction, Social Research and Opinion Capital adequacy ratio Joint venture commercial banks Banks specific factors |
| title | What Determines the Capital Adequacy Ratio of Joint Venture Commercial Banks of Nepal? An Evidence from Panel Data Analysis |
| title_full | What Determines the Capital Adequacy Ratio of Joint Venture Commercial Banks of Nepal? An Evidence from Panel Data Analysis |
| title_fullStr | What Determines the Capital Adequacy Ratio of Joint Venture Commercial Banks of Nepal? An Evidence from Panel Data Analysis |
| title_full_unstemmed | What Determines the Capital Adequacy Ratio of Joint Venture Commercial Banks of Nepal? An Evidence from Panel Data Analysis |
| title_short | What Determines the Capital Adequacy Ratio of Joint Venture Commercial Banks of Nepal? An Evidence from Panel Data Analysis |
| title_sort | what determines the capital adequacy ratio of joint venture commercial banks of nepal an evidence from panel data analysis |
| topic | Capital adequacy ratio Joint venture commercial banks Banks specific factors |
| url | https://journal-gehu.com/index.php/misro/article/view/66 |
| work_keys_str_mv | AT purnamanshrestha whatdeterminesthecapitaladequacyratioofjointventurecommercialbanksofnepalanevidencefrompaneldataanalysis |