DETERMINANTS OF LENDING BEHAVIOR OF COMMERCIAL BANKS IN NEPAL

This examined the determinants of lending behavior of commercial banks in Nepal. The study based on 14 commercial banks panel data for 2011/12 to 2020/21 over 10 year period. The study employed descriptive and causal comparative research design. The study used descriptive analysis, which included mean, minimum, maximum and Standard deviation. The determinants of lending behavior made by commercial banks in Nepal will be determined by using a fixed effect regression model. The finding of the study concluded that bank size, capital adequacy ratio, total deposit, have a positive and statistically significant effect on loan and advances. Likewise, Liquidity ratio, lending rate and inflation have a negative and statistically significant effect on Loan and advances. However the effect of gross domestic product has a negative and statistically insignificant effect on Loan and advances. The study suggested that commercial banks in Nepal should manage their lending by paying more attention to internal factor under management’s control over in line with the rules and regulations of the banking sector while keeping in mind the impact of the overall economic dynamic.