Liquidity Management and Profitability of Commercial Banks in Nepal
Liquidity management is one of the essential determinants of firms’ market value because it directly affects the profitability. This study investigates the relationship between Liquidity management and profitability of commercial banks in Nepal. The objective of the study is to identify the relationship between the Liquidity management and profitability and its impact on profitability. The relation between the Liquidity management and profitability is examined using Pearson correlation analyses. The effects liquidity on profitability is analyzed using the regression analyses. The data has found to be covering period 2012-2016 commercial Banks in Nepal. The Liquidity management represents the variables of the current Reserve ratio (CRR), Credit Deposit Ratio (CDR) and the profitability including return on equity (ROA). The result reveals that liquidity does not have its significant impact on profitability in Nepalese commercial banks.
Keywords - Liquidity, capital, short term assets, short term liabilities, profitability