Pub Date : 2020-10-01DOI: 10.3126/NRBER.V32I2.35298
G. Bhatta, Anu Mishra
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.
{"title":"Estimating Optimum Growth-Maximizing Public Debt Threshold for Nepal","authors":"G. Bhatta, Anu Mishra","doi":"10.3126/NRBER.V32I2.35298","DOIUrl":"https://doi.org/10.3126/NRBER.V32I2.35298","url":null,"abstract":"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.","PeriodicalId":372963,"journal":{"name":"NRB Economic Review","volume":"16 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114423870","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-10-01DOI: 10.3126/NRBER.V32I2.35299
Rajendra Maharjan
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.
{"title":"Causality between Financial Development and Economic Growth in Nepal","authors":"Rajendra Maharjan","doi":"10.3126/NRBER.V32I2.35299","DOIUrl":"https://doi.org/10.3126/NRBER.V32I2.35299","url":null,"abstract":"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.","PeriodicalId":372963,"journal":{"name":"NRB Economic Review","volume":"19 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130370589","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-04-01DOI: 10.3126/NRBER.V32I1.35295
Satyendra Timilsina
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 ed to understand 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.
{"title":"User Perception on Electronic Payment Services in Kathmandu Valley","authors":"Satyendra Timilsina","doi":"10.3126/NRBER.V32I1.35295","DOIUrl":"https://doi.org/10.3126/NRBER.V32I1.35295","url":null,"abstract":"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 ed to understand 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.","PeriodicalId":372963,"journal":{"name":"NRB Economic Review","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130964929","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-04-01DOI: 10.3126/NRBER.V32I1.35296
R. Paudel, C. Acharya
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.
{"title":"Financial Development and Economic Growth: Evidence from Nepal","authors":"R. Paudel, C. Acharya","doi":"10.3126/NRBER.V32I1.35296","DOIUrl":"https://doi.org/10.3126/NRBER.V32I1.35296","url":null,"abstract":"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.","PeriodicalId":372963,"journal":{"name":"NRB Economic Review","volume":"10 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114912273","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2020-04-01DOI: 10.3126/NRBER.V32I1.35297
Hari Gopal Risal, Suprima Poudel
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.
本文解释了信用风险对A类和B类金融机构绩效差异的影响。2008 - 2019年的动态面板数据采用了全部28家商业银行和11家国家级开发银行的数据进行分析。Arellano Bond方法用于控制未观测到的异质性，并减少参数估计中的偏倚，因为它们同时具有横截面和时间维度。结果表明，除资产收益率(ROA)外，A类银行与B类银行的信用风险状况在所有参数上均存在明显差异。结果表明，A类商业银行的净资产收益率标准差(Standard deviation of return on equity, SDROE)均比B类商业银行更脆弱，但其净资产收益率(ROE)和净资产收益率(NIM)均显著高于B类商业银行。研究结果表明，无论其类别如何，过去的表现bfi都有足够的能力预测其未来的表现，因为所有滞后变量都是显著的。建议发展银行集中精力维持适当的信贷与存款比率(CDR)，因为它已经影响了大多数业绩指标，而建议商业银行监测其贷款损失拨备与贷款和预付款总额(LLPTLA)的关系，以取得更好的业绩。研究发现，控制变量对银行绩效的影响可以忽略不计，但较高的通货膨胀率即使在很小的程度上也会使银行绩效恶化。此外，实际国内生产总值(GDP)增长对绩效的影响存在矛盾，需要进一步研究。综上所述，信用风险对尼泊尔银行的绩效起着至关重要的作用，a类银行的收益更安全。
{"title":"Role of Credit Risk in Performance difference between A and B Class Banks in Nepal","authors":"Hari Gopal Risal, Suprima Poudel","doi":"10.3126/NRBER.V32I1.35297","DOIUrl":"https://doi.org/10.3126/NRBER.V32I1.35297","url":null,"abstract":"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.","PeriodicalId":372963,"journal":{"name":"NRB Economic Review","volume":"32 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130673207","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-10-01DOI: 10.3126/nrber.v31i2.35303
H. Pathak
Using the DEA-based Malmquist total factor productivity index, this article measures the total factor productivity of Nepalese commercial banks during the period 2010-2011 to 2016-2017. It also examines whether the ownership structure and size of banks affect their efficiency. An input-oriented DEA model is used with aggregate panel data covering all the 28 commercial banks that are currently operating in Nepal. This article adopts constant returns to scale approach to measure and compare the efficiency and productivity of banks and to establish a benchmark for their performance. Interest expense, operating non-interest expense, deposits and labor are used as inputs variables and interest income, operating non-interest income and loan and advances as outputs variables. These data are extracted from the annual reports of the respective commercial banks. The mean efficiency score measured in terms of total factor productivity change resulted 1.008, which indicates that the efficiency level of Nepalese commercial banks has been increasing very slowly at the rate of 0.8% annually. Ownership structure of the banks influences marginally on the efficiency level of banks. The domestic private banks are relatively more efficient than the joint venture banks and the latter are comparatively more efficient than the public banks. The size of banks makes no significant difference in the efficiency level of banks.
{"title":"Malmquist Productivity Index Approach in Assessing Performance of Commercial Banks: Evidence from Nepal","authors":"H. Pathak","doi":"10.3126/nrber.v31i2.35303","DOIUrl":"https://doi.org/10.3126/nrber.v31i2.35303","url":null,"abstract":"Using the DEA-based Malmquist total factor productivity index, this article measures the total factor productivity of Nepalese commercial banks during the period 2010-2011 to 2016-2017. It also examines whether the ownership structure and size of banks affect their efficiency. An input-oriented DEA model is used with aggregate panel data covering all the 28 commercial banks that are currently operating in Nepal. This article adopts constant returns to scale approach to measure and compare the efficiency and productivity of banks and to establish a benchmark for their performance. Interest expense, operating non-interest expense, deposits and labor are used as inputs variables and interest income, operating non-interest income and loan and advances as outputs variables. These data are extracted from the annual reports of the respective commercial banks. The mean efficiency score measured in terms of total factor productivity change resulted 1.008, which indicates that the efficiency level of Nepalese commercial banks has been increasing very slowly at the rate of 0.8% annually. Ownership structure of the banks influences marginally on the efficiency level of banks. The domestic private banks are relatively more efficient than the joint venture banks and the latter are comparatively more efficient than the public banks. The size of banks makes no significant difference in the efficiency level of banks.","PeriodicalId":372963,"journal":{"name":"NRB Economic Review","volume":"131 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129642813","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-10-01DOI: 10.3126/nrber.v31i2.35302
Shashi Kant Chaudhary, Kiran Raj Pandit
During 2015 to 2019, there was a significant upsurge observed in the lending rate in Nepalese credit market. Interestingly, the lending amount also went up significantly in this period showing an anomalous relationship between lending and lending rate. This paper is an attempt to analyse this observed anomaly. We have estimated and examined the degree of elasticity of sectoral lending with lending rate in Nepalese context undertaking panel regression analysis covering all 28 commercial banks in operation in Nepal till mid-July 2019.The results show a positive and inelastic relationship to exist between sectoral lending and lending rate during the study period despite decreasing Herfindahl-Hirschman index in the same period, which means that level of competition is increasing in Nepalese banking industry. Our scenario analysis indicates syphoning of funds, and the changed role of bankers as major causes for this anomalous relationship.
{"title":"Price Elasticity of Sectoral Lending in Nepal","authors":"Shashi Kant Chaudhary, Kiran Raj Pandit","doi":"10.3126/nrber.v31i2.35302","DOIUrl":"https://doi.org/10.3126/nrber.v31i2.35302","url":null,"abstract":"During 2015 to 2019, there was a significant upsurge observed in the lending rate in Nepalese credit market. Interestingly, the lending amount also went up significantly in this period showing an anomalous relationship between lending and lending rate. This paper is an attempt to analyse this observed anomaly. We have estimated and examined the degree of elasticity of sectoral lending with lending rate in Nepalese context undertaking panel regression analysis covering all 28 commercial banks in operation in Nepal till mid-July 2019.The results show a positive and inelastic relationship to exist between sectoral lending and lending rate during the study period despite decreasing Herfindahl-Hirschman index in the same period, which means that level of competition is increasing in Nepalese banking industry. Our scenario analysis indicates syphoning of funds, and the changed role of bankers as major causes for this anomalous relationship.","PeriodicalId":372963,"journal":{"name":"NRB Economic Review","volume":"7 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123975506","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-04-01DOI: 10.3126/nrber.v31i1.35305
Ram Chandra Achary
Using the data from 1974/75 to 2017/18, this paper intended to find out the relationship between money supply, income and price level in Nepal. The paper has established the relationship between real money supply (both M1 and M2) with respect to real GDP, nominal money supply (both M1 and M2) with respect to price level and nominal GDP with respect to price level separately. The econometric tools such as ADF for unit root tests, SIC for lag length selection, bivariate Johansen Cointegration tests followed by VECM has been used for long-run causality. Further, VEC as well as VAR Granger Causality/Block Exogeneity Wald tests for short-run causality are used. The paper found bidirectional longrun causality between the real income with respect to both type of money supply in real terms. But there is no evidence of short run causation between these variables. Likewise, the study found the unidirectional long-run relationship runs from narrow money supply to consumer price. However, there is no short-run relationship from either side. Accordingly, there is no evidence of long-run as well as short-run relationship between broad money supply and consumer price level. Lastly, there is no evidence of long-run causality between nominal GDP and general price level. But the study found unidirectional short-run causality running from general price to nominal GDP. The results suggest that Nepal should focus on growth of time deposit component of broad money supply in long-run for economic growth and control of inflation.
{"title":"Relationship between Money Supply, Income and Price Level in Nepal","authors":"Ram Chandra Achary","doi":"10.3126/nrber.v31i1.35305","DOIUrl":"https://doi.org/10.3126/nrber.v31i1.35305","url":null,"abstract":"Using the data from 1974/75 to 2017/18, this paper intended to find out the relationship between money supply, income and price level in Nepal. The paper has established the relationship between real money supply (both M1 and M2) with respect to real GDP, nominal money supply (both M1 and M2) with respect to price level and nominal GDP with respect to price level separately. The econometric tools such as ADF for unit root tests, SIC for lag length selection, bivariate Johansen Cointegration tests followed by VECM has been used for long-run causality. Further, VEC as well as VAR Granger Causality/Block Exogeneity Wald tests for short-run causality are used. The paper found bidirectional longrun causality between the real income with respect to both type of money supply in real terms. But there is no evidence of short run causation between these variables. Likewise, the study found the unidirectional long-run relationship runs from narrow money supply to consumer price. However, there is no short-run relationship from either side. Accordingly, there is no evidence of long-run as well as short-run relationship between broad money supply and consumer price level. Lastly, there is no evidence of long-run causality between nominal GDP and general price level. But the study found unidirectional short-run causality running from general price to nominal GDP. The results suggest that Nepal should focus on growth of time deposit component of broad money supply in long-run for economic growth and control of inflation.","PeriodicalId":372963,"journal":{"name":"NRB Economic Review","volume":"25 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124115772","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-04-01DOI: 10.3126/nrber.v31i1.35307
Mukti Bahadur Khatri
This study examines the dynamic relationship among the stock market and macroeconomic factors such as nominal domestic variables (inflation, money supply, and interest rate), real economic activity (gross domestic product) and foreign variable (exchange rate and foreign direct investment) of Nepal. It has used Johansen and Juselius (1990) method of multivariate cointegration for the period Mid-July 1994 to Mid-July 2015. The finding of this study shows that the stock prices are positively and significantly related to money supply. Real economic activity and interest rate have insignificant and negative relationship with the stock prices. Similarly, foreign direct investment, inflation (CPI) and exchange rate with US dollar have a positive and insignificant relationship with the Nepalese stock market. Accordingly, the VEC estimates suggest that there is no significant effect of macroeconomic variables to the Nepalese stock price in the short run. In general, the presence of cointegration and causality suggest that Nepalese stock market is not efficient in both the short run and the long run.
{"title":"Macroeconomic Influence on the Nepalese Stock Market","authors":"Mukti Bahadur Khatri","doi":"10.3126/nrber.v31i1.35307","DOIUrl":"https://doi.org/10.3126/nrber.v31i1.35307","url":null,"abstract":"This study examines the dynamic relationship among the stock market and macroeconomic factors such as nominal domestic variables (inflation, money supply, and interest rate), real economic activity (gross domestic product) and foreign variable (exchange rate and foreign direct investment) of Nepal. It has used Johansen and Juselius (1990) method of multivariate cointegration for the period Mid-July 1994 to Mid-July 2015. The finding of this study shows that the stock prices are positively and significantly related to money supply. Real economic activity and interest rate have insignificant and negative relationship with the stock prices. Similarly, foreign direct investment, inflation (CPI) and exchange rate with US dollar have a positive and insignificant relationship with the Nepalese stock market. Accordingly, the VEC estimates suggest that there is no significant effect of macroeconomic variables to the Nepalese stock price in the short run. In general, the presence of cointegration and causality suggest that Nepalese stock market is not efficient in both the short run and the long run.","PeriodicalId":372963,"journal":{"name":"NRB Economic Review","volume":"120 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133635510","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-11-01DOI: 10.3126/nrber.v30i2.52279
Hom Nath Gaire
With the application of Robust Regression Method, this paper attempts to estimate the production function for manufacturing industries of Nepal. In this endeavour, the production function for Furniture and Pharmaceutical industries have been estimated using cross-section data of the Census of Manufacturing Establishment (CME) 2011/2012. The coefficients of log-linear form of Cobb-Douglas (C-D) production function reveal that the selected manufacturing industries are operating with decreasing returns to scales. The labour coefficients of both industries are found to be statistically insignificant. Negative labour coefficient of Pharmaceutical Industry indicates capital intensive nature of the production and minimal contribution of labour inputs. Although positive and significant, capital coefficients indicate both industries were running with decreasing returns to capital inputs. Total Factor Productivity (TFP) representing the state of technology and factors other than labour and capital found to be instrumental and significant for both the industries.
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