One of the common agenda of underdeveloped economies is to achieve a high and
sustainable level of economic growth in the long run. Domestic and external borrowings
are playing a crucial role in fulfilling the resource gap in the context of Nepal for a long
period. A growing number of recent studies support the idea of a debt threshold level
(turning point) above which debt starts reducing economic growth. This paper empirically
investigates the relationship between economic growth and several other factors
(investment, trade openness, population growth, domestic savings, and government debt) in
the context of Nepal. The debt-growth relationship has been estimated by regression
analysis and further explored the non-linear relationship between public debt and
economic growth using time series annual data for the period of 1976-2019. The ARDL
bound technique has been applied to estimate the short-run and the long run impact of debt
on economic growth. Moreover, a quadratic bivariate model based on ARDL coefficients
has been estimated to identify the growth maximizing level of debt. The estimated
parameters confirm the optimum public debt to GDP ratio in the context of Nepal is 33 per
cent. The policy implication of this finding for the Government of Nepal (GoN) is to ensure
public debt management in line with the growth maximizing debt threshold. Further, a high
level of trade deficits and government effectiveness in public sector management squeezes
the fiscal space in utilizing adequate public debt in Nepal.

This study examines the empirical relationship between financial development and
economic growth in Nepal. Financial development has been measured by three key pillars
of the financial system bank, capital market and insurance. Gross domestic product and
gross fixed capital formation are considered for economic growth indicators. Using time
series techniques, the stationary properties of the data sets are tested followed by Johansen
co-integration test to observe long run equilibrium relationship between the two variables
and Granger Causality test to identify the causal relationship among the variables. Also,
Vector Error Correction Model (VECM) has been employed to analyze the short run
dynamics of the system.
The result of the study reveals that there is cointegrating relationship between market
capitalization and economic development with short-run causality is running from market
capitalization to GDP. In regard to insurance market, error correction term is negative and
significance for both GDP and GCF indicating there is cointegrating relationship between
insurance market and economic development. However, the result shows no evidence of
causality between insurance premium and economic development in short-run. The
negative relation between bank and GDP reinforces that there is a cointegrating
relationship between banking sector development and economic development. The result
also shows that lagged value of GDP is significant. It shows that short-run causality is
running from GDP to banking sector development.

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.