Impact on Size and Efficiency of Commercial Banks in Nepal

This research report examines the impact of bank size on the efficiency of commercial banks in Nepal. The study investigates various factors affecting bank performance, including Return on Assets (ROA), Net Interest Margin, Credit to Deposit ratio, Interest Spread, and Capital Adequacy Ratio. The research employs a comprehensive methodology, encompassing literature review, research methodology, data collection, and analysis. The findings reveal the relationship between bank size and efficiency, providing valuable insights into the Nepalese banking sector. The report also highlights the importance of efficiency for stakeholders and the need for improvements in the banking division of Nepal for its advancement. The study uses two main methodologies which would be useful for the commercial banks are directly linked to the relevance of the cost efficiency that would provide stock performance of the commercial banks. It also includes an important direction towards the empirical investigation which points out the overall influence of the overall structure of ownership and the structure on its profitability. The research also provides recommendations for commercial banks to manage risks and challenges in the current situation and suggests avenues for future research.

Running head: IMPACT ON SIZE OF EFFICIENCY OF COMMERCIAL BANKS:
EVIDENCE FROM COMMERCIAL BANKS OF NEPAL
Impact on Size of Efficiency of Commercial Banks: Evidence from Commercial Banks of Nepal
Name of the Student
Name of the University
Author’s Note

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IMPACT ON SIZE OF EFFICIENCY OF COMMERCIAL BANKS: EVIDENCE FROM
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Acknowledgement
I would like to thank my University and the professor for allowing me to contribute as well as
providing opportunity to complete my research despite of all challenges that I have faced. It will
not forget the efforts that are made by the professors and other for guiding me with patience,
guidance and understanding. I would not have completed this research without their guidance
and understanding and you are all special to me.

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IMPACT ON SIZE OF EFFICIENCY OF COMMERCIAL BANKS: EVIDENCE FROM
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Abstract
The research basically focuses on the effect of measure productivity on commercial banks that
has focused on the focused on advertise as well as the common depiction of the recompense
procedures that are given to the commercial banks in Nepal. The study comprise of five chapters
through which the research about has been conducted almost the effectiveness of commercial
banks in Nepal. The primary chapter is the presentation which focuses out the common
information about the consideration in conjunction with the company. The targets of the inquiry
about has been talked about in this part together with the research limitations. Additionally, it
moreover incorporates the research questions beside aim and targets of the research. Within the
moment chapter, it comprise of writing survey which focuses out the variables that are to be
tended to within the study. It comprise of openings and dangers alongside assessment of
competitive advantage and methodologies for improving the execution. In chapter three, it
highlights the strategy which focuses out the strategies through which the research has been
conducted. It incorporates the reasoning, approach, plan, information collection strategy and test
of the research about. The fourth chapter incorporates the outcomes about and discoveries where
the outcomes about are to be assessed and examined as per the current circumstance which it
highlights the estimating, assessment, openings, dangers and competitive methodology. Within
the final chapter, it bargains with the conclusion where the concluding ideas have been said at
the side tending to the objectives and certain proposal. The proposal that have been specified
would offer assistance the company to manage with the dangers and challenges that are
confronting in current situation. Additionally, the long run research has too been given through
which the research can be upgraded in future a long time.

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IMPACT ON SIZE OF EFFICIENCY OF COMMERCIAL BANKS: EVIDENCE FROM
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Table of Contents
Chapter 1: Introduction....................................................................................................................5
1.2 Problem Statement.................................................................................................................7
1.3 Aims and Objectives..............................................................................................................9
1.4 Research Questions..............................................................................................................10
1.5 Scope of the research...........................................................................................................10
Chapter 2: Literature review..........................................................................................................12
2.1 Size of Banks.......................................................................................................................12
2.2 Factors affecting size of efficiency of commercial banks...................................................14
2.2.1 Return on Assets (ROA)...............................................................................................15
2.2.2 Net interest margin.......................................................................................................15
2.2.3 Credit to Deposit ratio..................................................................................................16
2.2.4 Interest Spread..............................................................................................................16
2.2.5 Capital adequacy ratio..................................................................................................17
2.3 Impact of Size on Efficiency...............................................................................................17
Chapter 3: Research Methodology................................................................................................20
3.1 Research Onion....................................................................................................................20
3.2 Research Philosophy............................................................................................................21
3.3 Research Approach..............................................................................................................22

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IMPACT ON SIZE OF EFFICIENCY OF COMMERCIAL BANKS: EVIDENCE FROM
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3.4 Research design...................................................................................................................22
3.5 Data Collection process.......................................................................................................23
3.6 Sampling method and sample size.......................................................................................24
3.7 Ethical consideration...........................................................................................................24
3.8 Timeline...............................................................................................................................25
Chapter 4: Data Collection and Analysis.......................................................................................26
Chapter 5: Findings........................................................................................................................39
Chapter 6: Conclusion and Recommendation...............................................................................42
6.1 Conclusion...........................................................................................................................42
6.2 Recommendation.................................................................................................................44
References......................................................................................................................................45
Appendices....................................................................................................................................50

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IMPACT ON SIZE OF EFFICIENCY OF COMMERCIAL BANKS: EVIDENCE FROM
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Chapter 1: Introduction
The financial crisis in the recent years plays a crucial role in banking sector along with its
overall efficiency. Increase in overall competition and the factors of globalisation has put
forwarded their higher efficiency that puts certain impact on the size of the commercial banks.
Despite of all of the improvements in the sector of banking, the progress of efficiency and the
strict regulation along with the position that is stable risk in nature mainly highlights the overall
position of the bank (Bhattarai 2016). These can be easily impaired along with the facts that
mainly motivated the overall empirical work in the recent years for assessing its overall
performance along with the risk that indicates in the industry of banking. In recent studies it has
been found that the impact of bank specific macroeconomics mainly determines the overall
profitability of the bank.
It also includes an important direction towards the empirical investigation which points
out the overall influence of the overall structure of ownership and the structure on its
profitability. As per the new aspect of the research, it is mainly dedicated to the efficiency
measurement along with the influences of the overall performance of the bank (Bhattarai 2017).
The study expected numerous components might influence the benefit comes about within the
inlet locale. Bank measure was accepted one from the imperative components that impact
productivity for inlet banks. The estimate of the full amount of money has been found with a
critical impact on banks productivity. By knowing the linkage between bank estimate and
proficiency will offer assistance to get it in the event that bigger bank are required to decrease
the cost of banks and give higher return to speculators or not (Bhattarai 2018). The investigation
that mainly uses two main methodologies which would be useful for the commercial banks are

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IMPACT ON SIZE OF EFFICIENCY OF COMMERCIAL BANKS: EVIDENCE FROM
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directly linked to the relevance of the cost efficiency that would provide stock performance of
the commercial banks.
This particular study is mainly focused on the commercial banks in Nepal which mainly
points out the positive impact of the efficiency in which the values are created as the operating
earning exceeds the overall cost of invested capital. It has also been estimated that the positive
cost of influence provides the efficiency of the shareholders who have observed the overall
influences on the commercial banks of Nepal (Panta and Bedari 2015). The industry is
developing at a fast rate which would draw in more number of workers towards the companies.
Expanding the number of firms would too increment the number of workers that would improve
the sum of lending and other exercises such as money related bolster, keeping money
administrations, loaning cash at certain intrigued rates and others. Both national as well as the
universal companies of Nepal takes after the driving way of giving the great quality of
administrations to the clients (Teshome, Debela and Sultan 2018). Creating the working
condition of the specialist is the most extreme vital portion which are to be upgraded inside the
given time period. The specialists of distinctive segments has confronted a few of the issues
which are to be included with improvement of the working condition within the banks.
This particular country include of inaccessible claimed banks and commercial banks
which are to be included interior the investigation almost. The foremost reason of the think about
is to highlight the distinctive sorts of effectiveness at the side their impacts (Marahatta et al.
2016). It has additionally been communicated that the keeping money division in Nepal requires
a number of enhancement for their headway which would increment the by and large era inside
the generation lines and increase the entirety of emolument to the pros. The Overall Assets of
commercial banks at conclusion of Saar 2074 BUS was Rest. 2621230.37 Million. Indeed in

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IMPACT ON SIZE OF EFFICIENCY OF COMMERCIAL BANKS: EVIDENCE FROM
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stock showcase, Commercial Banks plays prevailing part as both delicate and add up to NAPES
List is dominated by the development in cost of Stock of Money related things (Sharma, Pant
and Thapa 2014). The imperative status of the money related knowledge within the monetary
environment of the economy has energized the analysts to ask into the determinants of
productivity. Growing the number of banks would as well increase the number of agents that
would overhaul the whole of remuneration and other works out such as effectiveness of
commercial banks, loaning capacity and others.
1.2 Problem Statement
The problem basically centres on the effect on the proficiency that are given with the
commercial banks of Nepal and it has too been famous that the increment within the concerns for
the commercial banks that are getting less significance (Amatya 2016). The issue with the effect
on their proficiency that are provided to the banks within the keeping money segment of Nepal
basically highlights as they are getting the proper productivity inside the allocated time. It is
required to be expanded with the effectiveness of banks beside long working hours, hazardous
condition, and delay in instalment of salaries. The corporate social obligation is additionally
included within the industry because it pulled in generally worldwide mindfulness together with
enhancing the reverberation within the economy of the world (Gizaw, Kebede and Selvaraj
2015). It has been caught on that in creating nations, most of the specialists of distinctive
segments are getting their correct proficiency of the banks which would be advantageous for the
financial institutions. The outside partners of the keeping money divisions besides upgrading the
settled rate that are related with the managing an account businesses (Lucky and Nwosi 2015).
The issue with the proficiency that are given to the banks inside the banking division of Nepal
fundamentally highlights as they are getting the correct instalment interior the allocated time.

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IMPACT ON SIZE OF EFFICIENCY OF COMMERCIAL BANKS: EVIDENCE FROM
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It is required to be extended with the instalment of stipend in conjunction with long
working hours, unsafe condition, and delay in instalment of stipend. The exterior accomplices of
the keeping money divisions at the side overhauling the settled rate that are related with the
money related idea businesses (Kingu, Macha and Gwahula 2018). There would have been the
credibility of dodging passing in case the building had an elective outside staircase. It is the
managing an account commitment to prompt the masters inside the case of solvency or financial
ratios. It is the commitment of masters, to memorize how to overcome risk inside the working
environment. There can be diverse other perils and confinements of not having predominant
wage rate in banking industry. The people who do not have way better exhibitions by and huge
endeavour to dodge appraisals indeed within the occasion that there is an emergency
circumstance (Boadi, Li and Lartey 2016). This might lead to a put off care of the specific calm
and can be trade debilitating for commercial banks. In later times central bank of Nepal has
given significance to making bigger money related idea through its merger arrangement.
There are there state controlled commercial banks holding gigantic sum of resources and
expansive number of branches. They are anticipated to perform way better compared to little
measure money related teach. For case on the premise of add up to resources the largest bank at
end of 2016/17 was ROBB with add up to resources of 173.54 billion compared to littlest bank
i.e. Civil bank with add up to assets on as it were 41.72 billion (Ata and Buğan 2016). The
measure of financial institutions has been expanded due to merger. In such circumstance the
desire is that through merger the proficiency of organization can be expanded. The think about is
valuable to discover the questions and to fulfil the hole of prior studies. Different authors carried
out in numerous portion of world with respect to the effect of bank measure on performance of
bank appears diverse result. A few creator contend that estimate does not have any noteworthy

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IMPACT ON SIZE OF EFFICIENCY OF COMMERCIAL BANKS: EVIDENCE FROM
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effect on the execution of bank, whereas other contend that estimate do have effect on level of
proficiency (Nepali 2018). This consider appears the effect of measure on execution of Nepalese
commercial banks and reply on the off chance that Nepalese commercial bank have
accomplished economies of scale or diseconomies of scale. By taking board information of 28
commercial banks for five a long time from 2012/13 to 2016/17 (Bhattarai 2014). This ponder
look at the effect of estimate on productivity level of bank by controlling other factors.
1.3 Aims and Objectives
The aim of the study is to find the issues that is related with the impact on size of
efficiency of commercial specially the commercial banks of Nepal. The aims and objectives of
the study has been mentioned and discussed on the following part.
Aims
The basic point of this research is to bring around an appraisal of the proficiency for
judging its competitiveness inside the research.
Objectives
The objectives of the study has been mentioned in the following part.
1. The objective is to dismember the assessing structure of the worker's stipend and make
sensible evaluations from the figured out structure.
2. The other objective is to see at the openings of impact on efficiency of commercial banks in
Nepal which would offer help the companies in its advancement and enhancement inside the
grandstand.

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IMPACT ON SIZE OF EFFICIENCY OF COMMERCIAL BANKS: EVIDENCE FROM
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3. The extreme objective is to recognize a competitive strategy that would progress the
advancement and progression of banking industries division exhibit among its competitors.
1.4 Research Questions
The following are the research questions that has been asked to the employees of the
commercial in Nepal along with their institution’s efficiency that are associated with them.
1. Does size of financial institutions effect the level of efficiency?
2. What are the opportunities and threats prevailing in the banking sector of Nepal?
1.5 Scope of the research
The research is totally based on the impact on size of efficiency of commercial banks in
Nepal that can be considered with the evidences that are associated with the study. In this
manner, the scope of the study has shed light on the impact on size of efficiency of commercial
banks in Nepal. This examine can be considered as a multidisciplinary field of consistent
examination that's utilized for analysing the conduct and effect of productivity of commercial
banks on the social components (Alshatti 2015). In a broader sense, this explore would
endeavour to see into the impact of the quality and brought of commercial banks on the social
components, financial systems, definitive operations, wellbeing advancements and other
individual hones. More often than not in the long run related to the mental health and well-being
of the individuals of the society. This particular ask about too tries to stress on the improvements
that are ceaselessly happening inside the particular approaches of effect of commercial banks.
This consolidate changes in different arrangements such as suitable estimate of the banks that are
show in Nepal and those got to be highlighted with the changes in their inner environment
(Mbella and Magloire 2017). The changes are taking put in orchestrate to address the care,

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quality and capability of the in common mechanical approaches and plans. The request almost in
addition looks at the impact of the unused treatment advancements on the by and large
effectiveness of the commercial banks that influences it’s generally benefit. The study in addition
valuable since it highlights the commitment of the productivity rates to the proficiency of the
people as well as to the complete populace of the banks. Ordinarily required for understanding
the execution of the system of stipend and the impact of the mental wellbeing courses of action
on the nature of the common open (Kattel 2015). Through this examine the common open would
choose up a more significant understanding into the great thing approximately commercial banks
in Nepal and its effect on the sizes and take basic exercises in organize to create strides there in
common benefit of this specific industry.