What Influences Banks’ Lending? Evidence from Nepal
This study assessed the factors influencing bank lending behavior in Nepal. It is primarily focused on the bank-specific variables such as capital adequacy, profitability, bank size, and liquidity. The study in developing economies like Nepal helps to fill the gap in understanding how these factors...
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| Format: | Article |
| Language: | English |
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Academic Research and Publishing UG
2025-07-01
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| Series: | Financial Markets, Institutions and Risks |
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| Online Access: | https://armgpublishing.com/wp-content/uploads/2025/07/FMIR_2_2025_7.pdf |
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| author | Janga Bahadur Hamal Dilli Raj Sharma Narayan Prasad Aryal Gobind Kumar Singh |
| author_facet | Janga Bahadur Hamal Dilli Raj Sharma Narayan Prasad Aryal Gobind Kumar Singh |
| author_sort | Janga Bahadur Hamal |
| collection | DOAJ |
| description | This study assessed the factors influencing bank lending behavior in Nepal. It is primarily focused on the bank-specific variables such as capital adequacy, profitability, bank size, and liquidity. The study in developing economies like Nepal helps to fill the gap in understanding how these factors affect lending practices in the commercial banking sector. This study used a quantitative approach with a panel data regression model spanning ten years (2013-2022). The data were selected from ten commercial banks purposively. This study used an explanatory research design to examine the causal relationship between banks’ lending and its determinant factors. The investigations concluded that capital adequacy has a positive but statistically insignificant effect on bank lending. Conversely, return on assets has a negative and statistically significant association with lending. Likewise, liquidity has a positive and significant relationship with bank lending behaviors. Finally, size showed a strong and significant positive impact on lending. The study concludes that maintaining adequate capital and larger bank sizes are crucial for enhancing lending capabilities in Nepalese banks. Additionally, while profitability is essential for overall financial health, it may not directly correlate with increased lending activities. The study suggests that policymakers and banks prioritize the enhancement of capital requirements and promote larger banks to cultivate competitive lending environments within Nepalese commercial banks. |
| format | Article |
| id | doaj-art-e2f14fe17f084775b546d1e2761f4873 |
| institution | DOAJ |
| issn | 2521-1250 2521-1242 |
| language | English |
| publishDate | 2025-07-01 |
| publisher | Academic Research and Publishing UG |
| record_format | Article |
| series | Financial Markets, Institutions and Risks |
| spelling | doaj-art-e2f14fe17f084775b546d1e2761f48732025-08-20T03:11:50ZengAcademic Research and Publishing UGFinancial Markets, Institutions and Risks2521-12502521-12422025-07-019213514310.61093/fmir.9(2).135-143.2025What Influences Banks’ Lending? Evidence from NepalJanga Bahadur Hamal0https://orcid.org/0000-0003-3030-1640Dilli Raj Sharma1https://orcid.org/0009-0001-4453-6849Narayan Prasad Aryal2https://orcid.org/0000-0003-3438-3356Gobind Kumar Singh3https://orcid.org/0009-0005-9352-9003PhD, Assistant Professor, Saraswati Multiple Campus, Tribhuvan University, NepalPhD, Professor, Central Department of Management, Tribhuvan University, NepalPhD, Assistant Professor, Saraswati Multiple Campus, Tribhuvan University, NepalMBS, BBA, Freelance Researcher, Saraswati Multiple Campus, Tribhuvan University, NepalThis study assessed the factors influencing bank lending behavior in Nepal. It is primarily focused on the bank-specific variables such as capital adequacy, profitability, bank size, and liquidity. The study in developing economies like Nepal helps to fill the gap in understanding how these factors affect lending practices in the commercial banking sector. This study used a quantitative approach with a panel data regression model spanning ten years (2013-2022). The data were selected from ten commercial banks purposively. This study used an explanatory research design to examine the causal relationship between banks’ lending and its determinant factors. The investigations concluded that capital adequacy has a positive but statistically insignificant effect on bank lending. Conversely, return on assets has a negative and statistically significant association with lending. Likewise, liquidity has a positive and significant relationship with bank lending behaviors. Finally, size showed a strong and significant positive impact on lending. The study concludes that maintaining adequate capital and larger bank sizes are crucial for enhancing lending capabilities in Nepalese banks. Additionally, while profitability is essential for overall financial health, it may not directly correlate with increased lending activities. The study suggests that policymakers and banks prioritize the enhancement of capital requirements and promote larger banks to cultivate competitive lending environments within Nepalese commercial banks.https://armgpublishing.com/wp-content/uploads/2025/07/FMIR_2_2025_7.pdfbank lendingcapital adequacyprofitabilitybank sizeliquidity |
| spellingShingle | Janga Bahadur Hamal Dilli Raj Sharma Narayan Prasad Aryal Gobind Kumar Singh What Influences Banks’ Lending? Evidence from Nepal Financial Markets, Institutions and Risks bank lending capital adequacy profitability bank size liquidity |
| title | What Influences Banks’ Lending? Evidence from Nepal |
| title_full | What Influences Banks’ Lending? Evidence from Nepal |
| title_fullStr | What Influences Banks’ Lending? Evidence from Nepal |
| title_full_unstemmed | What Influences Banks’ Lending? Evidence from Nepal |
| title_short | What Influences Banks’ Lending? Evidence from Nepal |
| title_sort | what influences banks lending evidence from nepal |
| topic | bank lending capital adequacy profitability bank size liquidity |
| url | https://armgpublishing.com/wp-content/uploads/2025/07/FMIR_2_2025_7.pdf |
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