There have been significant efforts in Nepal to increase the outreach of electronic payments services (EPS) in the last couple of years but the usage of these services has not seen significant progress. People are showing reluctance to accept the new form of payments as there are issues on users’ acceptance of this new mode. There is a need to understand users’ perception on EPS and act accordingly to improve the usage. This paper analyses users’ perception on EPS from four aspects – perceived ease of use, perceived usefulness, perceived security and perceived trust. Results of the survey show that there are low average mean scores for security and trust when compared to perceived usefulness and ease of use. Respondents have cited accessibility of EPS as one of the major issues behind such a low usage. Most of the responses are found to be independent by gender, age group, income level and other attributes. Further, perceived usefulness and ease of use have higher effect on willingness to adopt EPS in future when compared to perceived security and perceived trust.
This paper aims to examine the role of financial development and economic growth in Nepal employing Autoregressive distributed lag (ARDL) approach of cointegration using time series data for the period from 1965 to 2018. Nepal is a unique country with big markets in the neighbors-India and China but remains as one of the poor landlocked developing countries, even being the earlier entrant in liberalization and reform. Nepal recently went through a substantial political transition and now the stable government is seeking substantial amount of foreign direct investment. In this background, it will be better, for a good policy analysis, to know how the financial activities have played the role in highly intended economic growth. We develop a model with five proxies of financial development (broad money, domestic credit to private sector, total credit from banking sector, capital formation, and foreign direct investment); and econometrically test their contribution in economic growth. Overall, the results suggest that financial development causes to economic growth substantially, except in the case of foreign direct investment. This result warns the policy makers to be more serious making investment friendly economy to attract the expected foreign direct investment.
This paper explains the performance differences between A and B class financial institutions arising from credit risk. The dynamic panel data from 2008 to 2019 has been considered from all 28 commercial banks and 11 national level development banks for analysis. Arellano Bond method has been performed to control the unobserved heterogeneity and to reduce biasness in the parameter estimation as they have both cross sectional and time dimensions. The results have shown clear differences in credit risk status between A class and B class bank with all the parameters except for Return on Assets (ROA). The results show that the A class commercial banks are less vulnerable than the B class bank as measured by Standard deviation of ROA ( standard deviation of return on equity (SDROE) both, yet offer substantially higher ROE and fairly higher NIM.
Findings suggest that the past performance BFIs, regardless their classes, are capable enough to predict their future performance as all lag variables are significant. Development banks are advised to focus on maintaining appropriate credit to deposit ratio (CDR) as it has been affecting most of the performance indicators whereas, commercial banks are advised to monitor their loan loss provision to total loans and advances (LLPTLA) for better performance. The control variables have been found to have negligible effect on performance of banks yet higher inflation deteriorates the performance even at a small amount. Further, contradictory findings on influence of real gross domestic product (GDP) growth with the performance demands a need of further research.
To recapitulate, the credit risk plays a vital role in performance of banks in Nepal and A class banks safer with returns.
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