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VOL. 5, ISSUE 3 (2023)
Factor affecting non-performing loans of commercial banks
Authors
Anisha Rana
Abstract
This study investigates the factors affecting
Non-Performing Loans of Commercial Banks of Nepal during the period from
2012/13 to 2021/22. Specifically, the study examines independent factors such
as Bank Size, Capital Adequacy Ratio, Loan to Deposit Ratio, Liquidity Ratio,
Return on Equity, and Return on Assets, while the dependent variable is
Non-Performing Loans. The data were collected from 10 commercial banks using
convenience sampling techniques. The study uses the pooled OLS model and the
random effect model as regression models after testing their appropriateness
using Breusch-pagan test and Hausman test. The result shows Bank size has
negative effect and significant on NPL which means as bank size increases the
level of NPL decreases. However, ROA, ROE, Liquidity, CAR and LDR have
insignificant effect on NPL. Therefore, commercial banks should be focused on increasing
bank size so that they diversify the portfolio of assets to reduce the size of
NPL.
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Pages:91-97
How to cite this article:
Anisha Rana "Factor affecting non-performing loans of commercial banks". International Journal of Finance and Commerce, Vol 5, Issue 3, 2023, Pages 91-97
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