Open AccessA FINANCIAL PERFORMANCE EVALUATION OF COMMERCIAL BANKS IN NEPAL USING AHP MODEL
Author(s) -
Ashish Bhandari,
Amrit Man Nakarmi
Publication year - 2016
Publication title -
international journal of the analytic hierarchy process
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.213
H-Index - 3
ISSN - 1936-6744
DOI - 10.13033/ijahp.v8i2.368
Subject(s) - asset quality , market liquidity , analytic hierarchy process , business , audit , financial ratio , finance , capital adequacy ratio , quality (philosophy) , financial analysis , actuarial science , accounting , economics , profit (economics) , philosophy , mathematical economics , epistemology , microeconomics
The inference of this study lies mainly in identifying and prioritizing financial parameters based on which financial institutions are considered efficient. This study attempts to find out the current performance of commercial banks in Nepal and develop a multi criteria model to check the health and status of these banks. This research will explore the Key Performance Indicators based on the Analytic Hierarchy Process and identify how these are affecting a bank’s performance in Nepal. The study reveals the financial positions of three public and ten private commercial banks. The data are mainly obtained from the Central Bank of Nepal annual audited financial statements of commercial banks (published by the respective banks), and a yearly economic survey. An average of four year ratios from 2008/09 to 2011/12 was evaluated to assess the financial performance of the commercial banks. Thirteen commercial banks were selected for the analysis in this study. The financial ratios used to assess bank performance were taken based on the Analytic Hierarchy Process framework in which hierarchical criteria were determined based on CAEL (Capital Adequacy, Asset Quality, Efficiency and Liquidity.