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VOL. 10, ISSUE 6 (2024)
Impact of credit risk, operational risk, market risk and leverage on profitability of commercial banks in Nepal
Authors
Ashika Khadka
Abstract
This study examines the impact of credit risk,
operational risk, market risk, and leverage on bank profitability in Nepal CIR , MRE and LR. This study
employs both descriptive and causal research designs, utilizing secondary data
from 10 commercial banks in Nepal SPSS
20 and Microsoft Office Excel 2003 to examine the relationships between various
factors affecting bank profitability. Model 1, which relates ROA to predictors
such as the Leverage Ratio (LR), Market Risk Exposure (MRE), Non-Performing
Loan Ratio (NPLR), and Cost-to-Income Ratio (CIR ),
shows a moderate correlation, with CIR
being the only significant predictor of ROA, indicating a strong negative
impact. However, NPLR, MRE, and LR do not significantly affect ROA. Model 2 is
examining ROE, reveals a weaker connection, with only LR showing a statistically
significant negative relationship, suggesting that higher leverage is
associated with lower ROE. The other predictors are NPLR, CIR , and MRE do not significantly affect ROE.
Overall, these findings highlight the importance of CIR
in determining ROA and leverage in influencing ROE, with other risk factors
having limited impact in this context.
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Pages:81-89
How to cite this article:
Ashika Khadka "Impact of credit risk, operational risk, market risk and leverage on profitability of commercial banks in Nepal". International Journal of Commerce and Management Research, Vol 10, Issue 6, 2024, Pages 81-89
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