Statement of the Problem In Nepal
Banking
plays a significant role in the economic development of the country by
extending credit to the people. Although banking industry in Nepal is making
remarkable progress and growth, it’s not without the problems. At the present
context, the main problem faced by the business sector as well as bank is the
unstable political and economic condition of the country.
Another
problem faced by the banking industry is the lack of optimal capital structure
in the commercial banks. The success and prosperity of a bank relies heavily on
maximization of the wealth of the shareholders or return on equity. Nepalese
banks do not take the capital structure concept seriously. The combination of debt
and equity used in the capital structure is not proportionate which in turn
affects the value maximization of the bank.
The
present study will try to analyze and examine the practice of capital structure
in the commercial banks in Nepal. This study specially deals with the following
problems.
Whether
or not the capital structure affects the growth of the bank?
To what
extent the capital structure policy is followed by the commercial banks?
What
are the main problems faced by the commercial banks in developing and
implementing the capital structure policy?
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