Author

Purna Man Shrestha

Abstract

The impact of bank specific factors on the financial performance of Nepalese commercial
banks is analyzed in this paper. The financial performance is measured by using return on
assets (ROA). Similarly, managerial efficiency (ME), liquidity (LIQ), credit risk (CR),
assets quality (AQ) and operational efficiency (OE) is used as proxy of bank specific
factors. This study used panel data of 17 commercial banks for the period of 2010/11 to
2017/18. Breusch and Pagan Lagrangian multiplier test showed that Pooled Regression
model is not appropriate and Hausman test concluded that Fixed Effect model is
appropriate rather than Random Effect model. Using the Fixed Effect model; this study
concludes that bank specific factors have significant impact on financial performance of
Nepalese commercial banks. Finally, this study reveals that ME, AQ and OE have
significant positive impact, and CR has negative impact on the financial performance of
Nepalese commercial banks.