Economic Literature

Book Review: Chris Hann and Keith Hart: Economic Anthropology: History, Ethnography, Critique

2018-02-08T16:34:27+00:00

Not available.

Economic Literature, Vol. XIII August 2016, page 61-63

Trend Analysis of the Value Added Tax in Nepal

2018-02-08T16:33:45+00:00

Value added tax (VAT) is the recent one of the sales tax family. This article tries to estimate the share of VAT in Gross Domestic Product (GDP), total tax revenue and indirect tax revenue. Besides, it also estimates the growth rate of VAT. This comprises 2.80 percent and 16.01 percent share of GDP in fiscal year 2000/01 and 2014/15 respectively. It also ranges from 30.69 percent to 37.63 percent share of tax revenue. Likewise, its share ranges from39.94 percent to 50.05 percent. The regression equation has been used to estimate annual growth rate of VAT. The estimate of the annual growth rate of VAT is found to be Rs.6.63billion. From this result, it is obvious that VAT has been increased by Rs. 6.63 billion annually during study period of the fifteen years. The coefficient of determination (R2) shows 87.76% of the total variation in VAT is explained by the variation in time variable. Similarly, the adjusted coefficient of determination (R2) exhibits that 86.82% of the total variance in VAT is explained by the variance in time variable. The calculated value of F-distribution is found to be 93.204, which is greater than critical value of F i.e. F0.05 (1,13)=4.67. It is significant at 5% level, which exhibits the best fitted regression line. From the statistical analysis, the value of autocorrelation is found to be 0.54 and its d-statistic is also found, which is significant at 5 percent level. Thus, the analysis justifies that there is a positive autocorrelation among error terms. To remove the autocorrelation, the transformation data have been used. But, the value of autocorrelation is not found corrected which needs by incorporating other important explanatory variables to further research.

Economic Literature, Vol. XIII August 2016, page 1-8

Motives for Mergers and Acquisitions in the Nepalese Perspective

2018-02-08T16:33:51+00:00

This paper attempts to identify the motives of mergers and acquisitions in the Nepalese financial sector.Questionnaire survey method is used to obtain the views of randomly selected 122 bankers of 21 post-merged financial institutions.A two-stage multivariate procedure is used to identify the important factors that drive the merger of financial institutions.In the first stage, an exploratory factor analysis is performed using ten statements that were put in the Likert scale in the questionnaire. In the second stage, important motives of mergers are determined by conducting an ordinary least squares regression using the factors extracted from factor analysis. It checks the internal consistency and reliability of the data using the Cronbach’s Alpha. The paper concludes hat the three most important motives for mergers of Nepalese financial institutions are: (i)meeting the regulatory requirement of paid up capital, (ii) realization of economies of scale and scope, and (iii) generation of efficiencies due to synergistic gains.

Economic Literature, Vol. XIII August 2016, page: 9-18

Effect of Bank Competition on Financial Stability: Empirical Evidence from Nepal

2018-02-08T16:33:56+00:00

There are two hypotheses about the relationship between competition and financial stability in the banking system: “competition-fragility” view argues that competition makes banks more likely totake excessive risks, thereby leading to fragility, while “competition-stability” view suggests that higherinterest rates in less competitive environments may cause borrowers to take higher risks,resulting in higher probability of non-performing loans and a more fragile system. This paper empirically examines the impact of competition on Nepalese banking system employing annual data of commercial banks from 1999 to 2012 period using fixed effects panel data model. The study period represents the era of rapid growth in financial institutions in Nepal. The HHI and n-bank concentration ratios are used as measure of competition while Z-index and nonperforming loans ratioare used as proxies of financial stability. The effects of macroeconomic factors and bank specific indicators are also taken into account. The results reveal that there is apositive relationship between greater banking competition and financial stability in Nepal, supporting the “competition-stability” view. Competition in banking sector is found to result in decrease in credit risk and contribute for financial stability. Mixed results have been achieved incase of the impact of bank competition on overall stability. The findings indicate that both higher concentration and higher competition are detrimental for stability. Hence, policymakers should facilitate further consolidation in the financial industry, however, it should be ensured that excessive consolidation doesn’t result in an environment that hinders competition. In addition,besides competition level in the banking system, macroeconomic situation of the country is found to be an important determinant of banking system stability.

Economic Literature, Vol. XIII August 2016, page 19-31

Impact of Remittance on Household Income, Consumption and Poverty Reduction of Nepal

2018-02-08T16:34:04+00:00

The study aims to identify the impact of remittance income on household per capita income, consumption, poverty headcount ratio and poverty gap by using simple linear and log linear regression model furthermore it focused on to identify the gap of income and consumption level of upper and poor quintile population and compare the income and consumption level of different development region of Nepal by using data of Nepal living standard survey III.It was found that,remittance income has statistically significant positive impact on household per capita income and consumption.There is significant negative relationship between remittance income and proportion of poor quintile population and significant positive relationship between remittance income and richest quintile population. It indicates that due to remittance income lower quintile population was decreased significantly and richest quintile population was increased significantly. Furthermore there is inverse relationship between remittance and poverty head count ratio and poverty gap, which indicates increment on average per capita remittance income reduce the poverty headcount ratio and poverty gap.

Economic Literature, Vol. XIII August 2016, page 1-8

Household Economies of Chepang People in Chitwan

2018-02-08T16:34:10+00:00

This study attempts to characterize a typical Chepang community in Chitwan district with reference to their economy at household level based on the study conducted in Lothar Village Development Committee. Chepang are considered to be one of the highly marginalized communities in Nepal having traditional subsistence based small economies. Their houses are small with mud floor, stone walls and straw roofs. One third of the Chepang households do not have toilets. They rear small number of mixed livestocks in a house eg. Cattle, buffaloes, poultry, goat and pig. They do not have household amenities like freeze, telephone, television, computer, motorcar and motorbike; but have mobile phones. More than ninty percent of Chepang go to jungle to collect one or the other types of edibles like githavyakur, wild fruits, and chiuri.Ninty five percent of Chepang people do not have bank account, thus rely on their friends and relatives for borrowing in household needs for money. Chi-square test reveals highly significant association between size of landholding and food sufficiency months, level of education and annual income, purpose of taking loan and sources of loan; as well as estimated annual income and account holding in bank.

Economic Literature, Vol. XIII August 2016, page 39-45

The Impact of Customer Retention Strategies in the Nepalese GSM Mobile Service Providers: A Case of Pokhara City

2018-02-08T16:34:16+00:00

The cellular industry of Nepal has grown by many folds with the influx of more mobile network providers in the market creating a hyper competition among themselves. Retaining the existing customers rather than just focusing on the regular market expansion is, therefore, becominginevitable for them to sustain. In this realm, this research carried out with the core objective of identifying and assessing the impact of customer retention strategies adopted by GSM Cellular Network companies, primarily Ncell & Nepal Telecom within the locality of Pokhara, taking a sample of 192 network users as respondents within a survey based research design framework, surfaced some important findings. Five out of the six customer retention strategies so identified: Service quality, customer care services, price, loyalty enhancement programs and communications showed an association with the type of network customer use except for other service facilities which showed no association with the network types. Very few of users from Pokhara were thinking to switch over to other networks. Internet proved to be the most effective marketing strategies than other media. Service Quality and loyalty enhancement programs were found to be the most preferred customer retention strategies by the users of both networks.

Economic Literature, Vol. XIII August 2016, page 1-8

Money Supply Determinants in Nepal: A Macro Analysis

2018-02-08T16:34:22+00:00

This paper analyzes the major money supply determinants in Nepal in the past 10 years from FY 2004/05 - FY 20014/15. In this study monetary base is determined by two explanatory variables (i.e. NFA and NDC) and are called the 'proximate' determinants of the base money. Among the explanatory variables, the net foreign asset (NFA) is found as better determinant than net domestic assets (NDA) in Nepalese economy. For the analysis of determinants of money multiplier (MM), the three explanatory variables i.e., reserve to total deposits ratio (r), time deposits to demand deposits ratio (t) and currency to demand deposits ratio (c) have been used. The model applied in this study shows that explanatory variable of time deposits to demand deposits ratio is the best determinant of money multiplier. The reserve money (RM) is analyzed as the best determinant of money supply, net foreign assets (NFA) is the major determinant of reserve money and time deposits to demand deposits ratio is the significant determinant of money multiplier.

Economic Literature, Vol. XIII August 2016, page 55-60

Editorial Vol.XIII

2018-02-08T16:33:42+00:00

No abstract available.