LIQUIDITY MANAGEMENT AND PROFITABILITY OF COMMERCIAL BANKS IN NEPAL

LIQUIDITY MANAGEMENT AND PROFITABILITY OF COMMERCIAL BANKS IN NEPAL

Binay Shrestha (Ph.D. Scholar), LNMU, Darbhanga

Birgunj Public College

binay273@gmail.com

 

ABSTRACT

Liquidity management is one of the essential determinants of firms’ market value because it directly affects the profitability. This study investigates the relationship between the Liquidity management and profitability and its impact on profitability in Nepalese commercial banks. Data analysis was done using descriptive statistics, Pearson correlation, regression analysis, multicollinearity and F-test. SPSS 21.0 version was used to analyze data to test hypothesis using SEM. The data used to analyze nine (9) samples size, out of 28 which has found to be covering period 2012-2016 of commercial Banks in Nepal. The Liquidity management represents the variables of the Current Reserve ratio (CRR), Credit Deposit Ratio (CDR) and the profitability including Return on Assets (ROA). The result reveals that CDR is significant impact on profitability and CRR is no significant effect on Profitability of commercial banks in Nepal.

 

Key Words: CDR, CRR, Liquidity, Profitability, ROA,

 

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