FINANCIAL INNOVATION AND ITS EFFECT ON THE FINANCIAL PERFORMANCE OF COMMERCIAL BANKS IN NEPAL

Pramod Sapkota

Abstract


In a modern economy, innovation is unquestionably a significant phenomena in every industry. In general, the utilisation of new concepts or methods is referred to as innovation. Commercial banks' creation of novel goods, services, or manufacturing techniques constitutes financial innovation. The study assessed financial innovation and its effect on financial performance of commercial banks in Nepal. The causal research design was used to carry out this study. Secondary data was derived from sources such as official records, reports, archives, and financial statements. The study targeted 30 commercial banks in Nepal. The relationship between the dependent variable and the independent variables are determined by a regression model. Variables data was analysed using Statistical tools. The study's findings make it clear that financial innovation in payment systems leads to enhanced commercial banks' financial performance, which benefits the banking industry as a whole. The association between financial success and the volume of Real Time Gross Settlement transactions, mobile banking, internet banking, and third-party wallets all show a favourable correlation. Financial innovation offers commercial bank customers greater ease, effectiveness, and security, increasing demand (uptake) for the new technologies. Banks and regulators should innovate to better serve customers. With faster transaction speeds, transaction volumes and commissions can rise. Government regulators should encourage banks to engage in financial innovation while strictly controlling such innovations to ensure payment system integrity. Financial innovation drives economic growth. Faster, more secure payment systems boost commercial and economic growth in all sectors, as well as financial deepening and development.

Keywords: Financial Innovation, Financial Performance, Commercial Banks, Nepal 


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References


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