Proposal about the liquidity and profitability of banks.pptx

A short presentation on liquidity of commercial bank and profitability

1. Proposal Viva A Presentation by Sadhana Das

2. 1. Title of Dissertation Liquidity Management & It’s Impact On Profitability of Financial Institution: Laxmi Sunrise Bank Pvt.Ltd

3. 2. Background of the Study Liquidity can be defined as the assets or securities which can be convertible into cash. Eg : short term assets & short term liabilities Short term assets like (cash, short term advances & balance with other bank) Short term liabilities like (short term borrowings, account payable, lending to financial institution & short term deposits) Profitability is the indicator that informs the key stakeholders whether a company earns a profit. The theme idea of liquiditity is gaining a lot of traction globally particularly on light of the present financial climate & the status of the global economy. Today’s corporate aims at maximizing profit, maintain a high level of liquidity to ensure safety, & achieve the highest level of owner net worth.

4. 3. Profile of the Organization Bank offers forward products to its customers, enabling them to hedge their risks. Like dealing in FX Forward is carried out by authorized dealers based on the purpose of the transaction. It also offers a number of Personal loan schemes such as Green loan for purchase and installation of solar home systems. Laxmi Bank offers “ DhanLaxmi ” – a SCT branded ATM Card. SCT has gained brand acceptance as the major shared services card platform in Nepal. The bank offers a learning resource center called e-learning @ Laxmi Sunrise Bank through the office intranet system which provides employees with access to various learning materials related to their job. Excess liquidity and limited avenues of investment were the highlights of 2022/23. These factors impacted our profitability, says Suman Joshi- CEO Laxmi Sunrise Bank.

5. 4. Research Questions, Objectives & Hypothesis Research Questions What is the nature of relationship between bank liquidity management and bank profitability? To what extent has the volume of bank cash influenced bank profitability? What is the nature of relationship between the level of treasury bills and certificates of deposits maintained by the bank and bank profitability? What are the constraints to the efficient resolution of the profit and liquidity dilemma of bank and how can they be resolved? Objectives of the Study To study the nature of relationship between bank liquidity management and bank profitability? To study the volume of bank cash influenced bank profitability

6. 4. Research Questions, Objectives & Hypothesis Objectives of the Study To study the nature of relationship between the level of treasury bills and certificates of deposits maintained by the bank and bank profitability To study the constraints to the efficient resolution of the profit and liquidity dilemma of banks and how they can be resolved Hypothesis of the Study H01: There is no significant relationship between the bank liquidity and profitability. H02: Bank treasury bills and certificates do not have any significant impact on bank profitability. H03: Bank balances exert no reasonable pressure on profitability. H04: Bank cash has no influence on its performance.

7. 5. Organization of the Study The present study will be organized into three chapters: Chapter I - Introduction: Background, profile of the organization, events, activities, etc ; objectives of the study, rational method of the study; review of the literature; limitation of the study. Chapter II – Result & Findings: Presentation of the data, analysis of the data & findings of the study. Chapter III – Discussion & Conclusion: Evaluation & Interpreting results obtained. Speculation of the similarities & differences between results obtained & the work of others. Present implications of conclusion for practical implementation or future studies.

8. 6. Limitations of the Study Each & every study has some limitations. Thus, the study is only focused on the commercial banks of Nepal & the challenges faced by these sectors. The other limitations of the study are: - The present study is limited to commercial banks of Nepal only & study liquidity to profitability ration only. The present study cannot be as accurate, the only reason being most of the data is extracted from the secondary sources.

9. 7. Literature Review Almazari (2014) investigated the internal factors that have an effect on profitability in Saudi & Jordanian banks. He found that there is a positive correlation between profitability measured by ROA of Saudi and Jordanian banks with some liquidity indicators , as well as there is a negative correlation with other liquidity indicators between profitability measured by ROA of Saudi and Jordanian banks. Racheteau and Rodriguez-Lopez (2013) has a spillover from liquidity needs in a OTC to labor market where_rms are issuing loans to hire workers. Like us, they use these frameworks to study the liquidity effects of different monetary policy tools. Moein et al. (2013) investigated the relationship between modern liquidity indices and stock return in companies listed on Tehran Stock Exchange. Results indicated that there was a positive and significant relationship between comprehensive liquidity index and stock return while there was no significant relationship between the index of cash conversion cycle as well as net liquidity balance and shock returns.

10. 8. Research Gap Liquidity plays a very vital role in determining the business of banks it study to determine the effect of liquidity management on the performance of commercial banks in the face of the need to attain both corporate goals of maintaining high level of liquidity and profitability. This study will bridge the gap and find out the influence of treasury bills and certificates of deposit on bank performance in Nepal. This study also consolidates gap of cash balances on bank performance and, recommend policy options aimed at resolving the profitability of problems of banks. Similar kinds of studies are conducted in Nigerian & Jordanian bank, it is one of kind of primitive study in Nepal.

11. 9. Research Design This study is based on both primary & secondary sources of data & follows descriptive research design. It is so because it study the dynamics of demand and supply in corporate sector & portions of lacking behind due to unmerged varied section. It doesn’t examine the relationship between dependent and independent variables of demand and supply of commercial realms.

12. 10. Population & Sample with sampling design Census sampling techniques will be used because of minimum and optimized data. Mailed Questionnaire Method will be used for appropriate queries to corporate staffs and reports, journals, newsletter, magazines & websites of banks will be used for secondary data collection. Under census sampling technique “Snow Ball Sampling Technique will be used to fetch data as to reach out to the members of the population that you can and then count on these participants to recruit others for your study.

13. Sampling Method Mailed Questionnaire List of Questions Section A: Demographic Information Name: Age: Gender: Male Female Other Position at Laxmi Sunrise Bank: Junior Officer Senior Officer Manager Senior Manager Executive

14. Sampling Method Department: Treasury Risk Management Finance Operations Other (Please specify) Years of Experience in the Banking Industry: Less than 1 year 1-3 years 3-5 years More than 5 years

15. Sampling Method Section B: Understanding of Liquidity Management How would you rate your understanding of liquidity management in financial institutions? Excellent Good Fair Poor How important is liquidity management for the overall health of a bank? Very Important Important Neutral Not Important

16. Sampling Method How frequently does Laxmi Sunrise Bank review its liquidity position? Daily Weekly Monthly Quarterly Annually Section C: Liquidity Management Practices Does Laxmi Sunrise Bank have a dedicated team for liquidity management? Yes No How effective are the liquidity management policies and procedures at Laxmi Sunrise Bank? Very Effective Effective Neutral Ineffective Very Ineffective

17. Sampling Method What are the main challenges faced by Laxmi Sunrise Bank in managing liquidity ? (Select all that apply) Market Volatility Regulatory Compliance Funding Costs Customer Withdrawal Patterns Other (Please specify) How does Laxmi Sunrise Bank ensure compliance with regulatory liquidity requirements? Regular Audits Internal Controls Training Programs Technology Solutions Other (Please specify) Section D: Impact on Profitability profitability of Laxmi Sunrise Bank ? To what extent does liquidity management impact the Very High Impact High Impact Moderate Impact Low Impact No Impact

18. Sampling Method How do you perceive the relationship between liquidity management and profitability? Directly Proportional Inversely Proportional No Clear Relationship What are the primary ways in which liquidity management influences profitability at Laxmi Sunrise Bank? (Select all that apply) Interest Rate Management Investment Decisions Cost of Funds Risk Mitigation Other (Please specify) Has Laxmi Sunrise Bank experienced any significant profitability changes due to liquidity management decisions in the past year? Significant Increase Moderate Increase No Change Moderate Decrease Significant Decrease

19. Sampling Method Section E: Suggestions and Improvements In your opinion what improvement can be made to the current liquidity management practices at Laxmi Sunrise Bank? Increased Use of Technology Enhanced Training Programs Better Regulatory Compliance Improved Risk Management Strategies Other (Please Specify) Any additional comments or suggestions regarding liquidity management and its impact on profitability at Laxmi Sunrise Bank? Thank you for your time and valuable insights. Your responses will greatly contribute to understanding and improving liquidity management practices at Laxmi Sunrise Bank Pvt. Ltd.

20. 11. Data Collection There are mainly two sources of data like primary & secondary but the major portion of this research is extracted from secondary data. This study made use of secondary data from the Nepal Stock Exchange, bulletin of the Nepal Rastra Bank (NRB), Annual reports of Commercial banks i.e. Laxmi Sunrise Bank Ltd, Machhapuchhre Bank Ltd., Life Insurance Corporation Nepal (LICN), Quarterly reports of NRB & NRB’s Economic & Financial Review. Data will be collected by using mailed questionnaire method and financials of banks from last five years. The method of analysis used is the regression analysis. The stationarity of the individual variables were determined with the unit root test.

21. 12. Research Framework & Variables Model Specification The function for this study is given as: Y = b0 + b1X1 + b2X2 + b3X3 + e. Where : Y = Profitability representing the dependent variable; b0, b1, b2, b3; are regression coefficients or parameters; X1, X2, X3; are independent variables; X1 = Bank cash asset (CA); X2 = Bank balances, and X3 = Treasury bill and certificate (TBC). Test of Significance & the Decision Rule This is usually tested using the following statistics: F* = MSR/MSE

22. 13. Analytical Tools Simple statistical tools like percentage, ratio & average will be used to identify the data. Pie Charts & Bar Diagrams will be used for illustration purposes.

23. 14. References Rahadi , D. R., & Abdillah , L. A. (2013). The utilization of social networking as promotion media in financial institutions (Case study: Reserch on Profitabilty of financial institutions ). ArXiv . https://doi.org/10.48550/arXiv.1312.3532 Katz, B. (1987), Managing Export Marketing, London: Gower Publishing 40. Grobar , L.M. Policies to promote employment and preserve cultural heritage in the banking sector. Int. J. Cult. Policy 2017, 2, 1–13. [ CrossRef ] (Aragón, 1998; González, 2003; Greenwald & Kahn, 2005; Hernández & Domínguez , 2003; Kotler , 2003; Mintzberg , 1987; Páramo , 2003; Porter, 1999; Zikmund & D’Amico, 1993 )- mexican success factors bibliography [ CrossRef (1)] Ghimire , Ananda (2074) : Fundamentals of Service Marketing, Kathmandu ; Asmita Publication (P).Ltd., Nepal Pant, P.R (2073), Fundamentals of Business Research Methods", Kathmandu: Buddha Academic Enterprises.