Remittances, Risk, and Returns: Panel Evidence from Commercial and Development Banks in Nepal

Date of Award

Spring 5-2-2025

Document Type

Restricted Thesis

Degree Name

Bachelor of Arts (BA)

Department

Economics

First Advisor

Monica Das

Second Advisor

Marketa Wolfe

Abstract

Commercial and development banks make up most of Nepal’s stock market, yet past studies rarely look at how they respond differently to macroeconomic changes. This paper uses panel data from 32 banks between 2010 and 2025 to examine how interest rates, foreign direct investment, government spending, and major shocks like the 2015 earthquake and COVID-19 affect annual stock returns. Using a random effects model, I find that interest rate increases are associated with higher stock returns, especially for commercial banks. Development banks, in contrast, see much sharper declines during shocks. Government spending also appears to boost returns mainly for commercial banks. These results suggest that different types of banks in Nepal are not equally exposed to macroeconomic forces, and that policy responses may need to reflect these structural differences.

This document is currently not available here.

Share

COinS