Project finance allows project assets to be separated from the sponsor and to be financed on the basis of the cash flow from the project assets. It allows a sponsor to undertake a project with more risk than the sponsor is willing to underwrite independently.
Commercial banks can provide project financing because they are able to evaluate complex project financing transactions and to assess and assume the construction and performance risks usually involved in such financings. However, largely because of the short-term nature of a commercial bank's liabilities its deposits , commercial bank participation is usually limited in amount, although banks closely monitor and control their project finance assets much as they do their other long-term assets.
Project sponsors frequently seek financing through a "request for proposal" or "RFP" process, and several commercial banks are likely to form separate syndicates or "clubs" to respond to an RFP. The division of work within a syndicate is often functional, and has become quite efficient, with individual banks designated as technical agent, documentation agent, syndication agent, and variations thereof 1.
A project's sponsor normally requests commitments from its commercial banks for both construction financing and then the permanent long-term financing of its project.
A typical commitment for construction financing is for two years and permanent financing is usually from ten to fifteen years, although in rare cases commercial banks have provided permanent financing commitments of twenty years or more.
Most permanent financing commitments by commercial banks include specified increases in the applicable interest rate "step-ups" in the applicable margin or spread over the bank's cost of funds to provide incentives for the commercial bank financing to be refinanced before its scheduled maturity. The successful commercial bank syndicate for a project financing usually seeks to "sell down" its underwritten commitments in a further coordinated syndication to a larger bank group.
This subsequent syndication may occur before financial closing i. The project's construction financing, which normally bears interest at a floating rate, usually requires interest rate risk to be hedged through an interest rate swap, cap, or collar 2. Upon completion of construction and demonstration of the project's acceptable performance, most sponsors will seek to refinance the project with permanent, long-term, and fixed-rate financing.
This refinancing is usually on terms that allow the project more operational flexibility, because construction risk has been eliminated from the project, and because obtaining waivers from public holders is quite difficult. This traditional model has proven very successful over a considerable period of time and in a wide variety of industries and specific applications. It has provided and will continue to provide substantial capital to qualifying projects throughout the world.
Although primarily financed by governments to date, this level of government spending places an enormous burden on public finances. The scope of this projected infrastructure investment is challenging. For example, China wants to install 8 million telephone lines a year after This is in itself an impressive goal until one notes that in China had a total of only 18 million installed lines 4. All available evidence indicates that private infrastructure investment as opposed to public investment is growing rapidly throughout the world, but especially in the developing countries in Asia, Latin America, and the former Eastern bloc.
According to one recent survey, private investment in infrastructure outside the United States doubled from to The survey compiled with the assistance of the World Bank's newly established Private Provision of Public Services Group notes the limited availability of commercial bank financing for these projects.
Obtaining long-term institutional debt and equity financing in sufficient amounts remains a challenge even for financially sound, well-structured projects. The survey also notes that the large construction companies increasingly dominate infrastructure development, but are funding this development through use of their own balance sheets.
Several factors have constrained the participation of commercial banks in the current project finance boom for international infrastructure projects:. While a complete analysis of the commercial banks' responses to these factors is beyond the scope of this article, the responses of commercial banks in the area of project finance in this environment, and the new roles now played by commercial banks, are both illustrative and instructive.
As commercial banks look for fee income through "unbundling" their financial services, many have established project finance advisory groups, some with considerable success. These groups offer advisory services that include the commercial bank's experience in feasibility assessment and financial analysis, trade credit, and international finance especially the bank's experience with the multi- and bilateral institutions that are the critical participants in most international infrastructure projects , and its overall project development and management skills including the negotiation and documentation of increasingly large and complex transactions.
Some commercial banks have used their project finance experience to market corporate trust services in international capital market financings for projects. They can sell the value to sponsors and investors of having an experienced trustee or fiscal agent involved in complex project financing transactions.
Most of the larger commercial banks have accelerated the development of their syndication, private placement, and other similar debt distribution groups. This development has been limited in the U. While the U. Morgan recently was placed sixth in total equity and debt underwriting replacing Salomon Brothers 7. Several other commercial banks are close behind J.
Morgan in such rankings. Commercial banks occupied seven of the top fifteen places in overall private placement activity in 8 and five of the top six places in traditional private placements in the first half of 9.
IDD describes this performance as a "stunning development" and "almost complete dominance. In a related development, commercial banks have teamed up with their frequent competitors, insurance companies, to provide financing for projects. An insurance company may provide a separate commitment for permanent financing to "take out" the commercial bank's construction financing that the commercial bank can rely on in extending its construction financing commitment.
More often, an insurance company and the commercial bank together provide commitments for both construction and permanent financing. A prime asset in any role is the commercial banks' wealth of trade credit and international finance experience with the multi- and bilateral agencies, including the World Bank and its agencies the International Finance Corporation and Multilateral Investment Guarantee Agency , the U.
Export-Import Bank, the Overseas Political Insurance Corporation, and other regional development banks and export credit agencies. The bank opens letter of credit in favour of a customer to facilitate his purchase of goods. This arrangement passes the risk of the supplier to the bank.
The customer pays bank charges for this facility to the bank. Working Capital Loan — Sometimes a borrower may require additional credit in excess of sanctioned credit limit to meet unforeseen contingencies.
This arrangement is presently applicable to borrowers having working capital requirement of Rs. The minimum period of WCDL keeps on changing.
WCDL is granted for a fixed term on maturity of which it has to be liquidated, renewed or rolled over. On such additional credit, the borrower has to pay a higher rate of interest more than the normal rate of interest. The nature and extent of security offered play an important role in influencing the decision of the bank to advance working capital finance.
The bank provides credit on the basis of following modes of security: Hypothecation — Under this mode of security, the banks provide working capital finance to the borrower against the security of movable property, generally inventories. It is a charge against property for the amount of debt where neither ownership nor possession is passed to the creditor. In the case of default the bank has the legal right to sell the property to realise the amount of debt.
Pledge — A pledge is bailment of goods as security for the repayment of a debt or fulfillment of a promise. Under this mode, the possession of goods offered as security passes into the hands of the bank. The bank can retain the possession of goods pledged with it till the debt principal amount together with interest and other expenses are repaid. In case of non-payment of loan the bank may either; Sue the borrower for the amount due;Sue for the sale of goods pledged; or After giving due notice, sell the goods.
Lien — Lien means right of the lender to retain property belonging to the borrower until he repays the debt. It can be of two types: i Particular lien and ii General lien. Particular lien is a right to retain property until the claim associated with the property is fully paid.
On the other hand, General lien is applicable till all dues of the lender are paid. Banks usually enjoy general lien. Mortgage — Mortgage is the transfer of a legal or equitable interest in a specific immovable property for the payment of a debt. In case of mortgage, the possession of the property may remain with the borrower, while the lender enjoys the full legal title.
The mortgage interest in the property is terminated as soon as the debt is paid. Mortgages are taken as an additional security for working capital credit by banks. Charge — Where immovable property of one person is made security for the payment of money to another and the transaction does not amount to mortgage, the latter person is said to have a charge on the property and all the provisions of simple mortgage will apply to such a charge.
A charge may be created by the act of parties or by the operation of law. It is only security for payment. Further, the cash credit arrangement, the principal device through which such finance has been provided, is quite advantageous from the point of view of borrowers.
Banks have not been concerning themselves about the soundness of the borrower or about the actual end use of the loan. Bank financing was mainly security oriented. This security oriented system tended to favour borrowers with strong financial resources irrespective of their economic function. This resulted in the concentration of economic power. Another problem was that the increase in the bank credit was not commensurate with the expansion in the level of inventory and production.
This resulted in a number of distortions in financing of working capital by banks. Major Banks was nationalized in and with that, approach to lending also changed. Consequently, bank credit has been subjected to various rules, regulations and controls. The basic objective of regulation and control of bank credit is to ensure its equitable distribution to various sectors of the Indian economy.
The RBI has been trying, particularly from the mid-sixties onwards, to bring a measure of discipline among industrial borrowers and to redirect credit to priority sectors of the economy. The RBI has been issuing guidelines and directives to the banking sectors towards this end. Important guidelines and directives have derived from the recommendations of certain specially constituted groups assigned with the task of examining various aspects of bank finance to industry.
If part of the fixed assets is also financed with current debt or short term credit, then the firm will be regarded more aggressive. Conservative Policy This is the policy in which all of the fixed assets, all of the permanent current assets, and some of the temporary current assets of a firm are financed with long-term capital.
This is a very safe financing policy and, therefore, not very appropriate from the standpoint of profit. Maturity Matching Policy Maturity matching policy, also known as self-liquidating policy calls for matching assets and liability maturities. This strategy minimizes the risk that the firm will be unable to pay off its maturing obligations if the liquidations of the assets can be controlled to occur on or before the maturities of the obligations.
At the limit, a firm could attempt to match exactly the maturity structures of its assets and liabilities. Inventory expected to be sold in 30 days could be financed with a day bank loan; a machine expected to last for five years could be financed by a 5-year loan; a year building could be financed by a year mortgage bond; and so forth. It lies between the aggressive and conservative policies. It is a discipline that seeks proper policies for managing current assets by current liabilities and practical technique for maximizing the benefits from managing working capital.
The term working capital management closely relates with short-term financing; it is concerned with collection and allocation of resources. It is the life-blood and controlling nerve center for any types or business organization because without the proper control upon it no business can run smoothly.
Thus, it plays the vital role in the success and failure of the organizations as it deals with the part of assets, which are transformed from one form to another form during the course of manufacturing cycle. By the definition of various experts of working capital management, we conclude that, all institution, whether private or public, financial institution, manufacturing or non-manufacturing that need just adequate working capital to compete with competitive market.
It is because over or under adequacy of working capital is dangerous from the firms objective points of view. On the other hand, under investment on working capital affects the liquidity position of the firm and causes to financial hindrance and failure of the company.
It is therefore, a recognized fact that any mistake made in management of working capital can cause to adverse effects in business and reduces the liquidity, turnover and profitability and increases the cost of financing of the organization.
A firm can have different level of current assets to support the same level of output. The level of current assets can be measured by relating current assets to fixed assets.
Its proportion upon the fixed assets of the firm indicates the working capital policy of the firm namely conservative and aggressive in two extreme ends. A conservative policy implies greater liquidity or lower risk, while an aggressive policy indicates higher risk and poor liquidity Panday, Higher level of current assets implies greater liquidity and solvency of the firm. There is less risk of technical insolvency, but a considerable amount of funds will be tied up in current assets, which causes to lower the profitability.
On the other side, to have a higher profitability, a firm can take an aggressive current assets policy maintaining lower level of current assets, which will lower the solvency of the firm and the level of risk in the same manner. Thus the reasonable approach is to balance the cost of maintaining current assets and risk associated in such a way that the tradeoff between risk and return is minimized. The bond conceptual findings of their study provide sound knowledge and guidance for the further study in the field of management of working capital of any enterprise and naturally to this study as well.
They explain, in the beginning, the importance of working capital, concept of working capital, financing of working capital, the use of short term versus long-term debt, relationship of current assets to fixed assets. In the next chapter they have dealt with the various components of working capitals and their effective management techniques. The components of working capital they have dealt with the cash, marketable securities, receivable and inventory for the efficient management of cash, they have explained the different cash management models.
They have also explained the major sources and forms of short term financing, such as trade credit, loans from commercial banks and commercial paper. Pradhan has published a book on management of working capital in Nepalese PEs.
This book is based on the study of nine manufacturing public enterprises of Nepal for the duration of ten years from to AD. In his study, he aimed at examining the various aspects of management of working capital in selected manufacturing public enterprises of Nepal.
His study has mentioned the following findings. This poor liquidity position has been noticed as the enterprises have either negative cash flows or negative earnings before tax or they have excessive net current debts which cannot be paid within a year.
Of all the different components of current assets, on an average, the share of inventories in total assets is the largest followed by receivables and cash in most of the selected enterprises? It means the working capital management is concerned with the problem that arises in attempting to manage the current assets, the current liabilities and the inter-relationship that exist between them. He has also described the different methods for efficient management of cash and marketable securities and various models for balancing cash and marketable securities.
Some major findings of her study are hereunder. Bills purchased and discounted. The cash reserve exceeds much more than the required cash reserve. He analyzed the selected nine manufacturing public corporation with the 12 years data from Regression equation has been adopted for the analysis. His study has summarized that the earlier studies concerning about the demand for cash and inventories by business firm did not report unanimous findings. A lot of controversies exist in respect to the presence of economics of scale, roles of capital cost, capacity utilization rates and the speed with which actual cash and inventories adjusted to describe cash and inventories respectively.
The regression results suggest strongly that the demand for working capital and its components is function of both sales and their capital cost.
The estimated results show that the inclusion of capacity utilization variable in model seems to have contributed to the demand function cash and net working capital only. The effect of capacity utilization on the demand for inventories, receivables and gross working capital is doubtful. Specially, his study is focused on the liquidity turnover and profitability position of those enterprises. In this analysis, he found that four public enterprises have maintained adequate liquidity position, two public enterprises have excessive and remaining others public enterprises had failed to maintain desirable liquidity position.
On the turn over side, two public enterprises had negative turnover, four had adequate turnover, and one had higher turnover on net working capital. He had also found that out of ten public enterprises six were operating in loss while only four were setting some percentage of profit.
With the reference of his findings, he has pointed certain policy flaws such as deficient financial planning, negligence of working capital management, deviation between liquidity and turnover of assets and inability to show the positive relationship between turnover and return on net working capital. At the end, he has made some suggestive measures to overcome from the above policy issues. These are identification of management information system, positive attitude towards risk and profit and determination of right combinations of short-term and long-term sources of funds to finance working capital needs.
Mahat May 26 , also has published article relating to spontaneous resources working capital management. He has defined the three major sources of working capital i. Debt financing include short-term bank financing such as bank overdraft, cash credit, bills purchase and discounting, letter of credit etc. XII, No. Mahat has defined that working capital management is one of the important pillars of corporate finance. However, Nepalese industries are facing difficulty in their survival by the cause of recession, which can bring best and worst in corporate finance such an environment should be efficient enough to cope with the possible worst happenings in future for working capital management.
He has said that managing the working capital resources for a profit making industries are routine affairs of just making payment and arranging collection of debtors. In contrast, the company in debt trouble, it is rather difficult to meet its working capital gap by way of debt financing, the company should have to bear interest, which may cause to increase in the percentage of operating expenses to the turnover and depletion in the profits.
Therefore, spontaneous sources of working capital will be a better source for working capital in order to improve its performance. Consequently, in a changed economic scenario, every company should realize that inability to manage working capital might land them in a vicious circle that can be hard to get out from. It is indeed essential for industries to tighten their belts and checks their financial stability to face and stand in forthcoming competitive day.
Acharya Jan - Mar, has published an article relating on working capital management. He has defined the two major problem i. The operational problems; he found were increase of current liabilities than current assets, not allowing the current ratio and slow turnover of inventories.
Similarly, change in working capital in relation to fixed capital had very low impacts over the profitability, than transmutation of working capital employed to sales, absent of apathetic management information system. Break-even analysis, funds flow analysis and ratio analysis were either undone or ineffective for performance evaluation. Finally, monitoring of the proper functioning of working capital management has never been considered as managerial job. In the second part, he has listed the organizational problems in the public enterprises.
In most of the public enterprises, there is lack of regular internal and external audit system as well as evaluation of financial results.
Similarly very few public enterprises have been able to present their capital requirement functioning of finance department is not satisfactory and some public enterprises are even facing the under utilization of capacity. The banks have better utilization of their loan and advance and total deposit. Therefore, the banks have been better utilization of their cash and bank balance and current liabilities.
Since, the mean value of loan and advance on total current assets of sample banks are significantly high and invest their fund in income generating sector. SCBNL should increase loan and advance portion. The bank should improve its current investment policy about loan and advance. Their current and quick ratio is lower than normal standards. So they have faced liquidity problem.
The trend of Liquidity ratio i. It means NIC is bearing Lower risk, which mean lower profits in commercial banks; higher liquidity is not always the cause of Lower profitability. On the other hand, coefficient of correlation between cash and bank balance to current liabilities in case of NIC also shows positive relationship.
After considering the probable error there is highly significant relationship between net working capital and net profit in both banks. But the cash and bank balance to deposit ratio are not significantly different. As, banks should give priority to invest their fund on loan and advances to get higher return, NABIL has not as much of loans and advances proportion on total current assets than NIC.
It may be due to higher cost on NIC. So NABIL should give attention to increase the current assets to build ability to meet its current obligation. Though both banks use high short term liabilities to cover total capital, NABIL should decrease the long term to increase the degree of protection against long term creditors and to protect total capital against long term debt.
However, it is not significant in case of NBBL. It shows that liquidity management policy of these banks is significantly difference. So, it should review, its policy are to reverse the trend, as they are most productive assets.
So, it should increase the percentage by adopting new policies. Due to low turnover non earning idle funds might be high on these banks.
So, these banks should give proper attention on the utilization of idle funds in more productive sector. Some researchers have selected various different companies for this research and some have concentrated on only one company. So, it has been believed that the study will be different than earlier one. Research design is a plan structure and strategy of investigation conceived so as to obtain answer to research questions and to control variances.
The study aims to portraying accurately on the working capital or current assets and current liabilities and its impact on overall financial position of sample banks.
The study has been conducted to assess the existing situation of working capital management of commercial banks and describe the situation and events occurring at present. The research design followed for this study is basically a historical, empirical and descriptive-cum-analytical.
This sample banks are the pioneer leading bank in the context of deposit collection and loan disbursement. Besides these, the annual report of Nepal Rastra Bank has also been equally reviewed. Similarly, various data and information are collected from the periodicals, economic journals, managerial and economic magazine and other published and unpublished reports and documents from various sources.
Likewise, the primary data have been collected by distributing questionnaire to the employees and the shareholders of the sample banks. The main focus will be on Ratio Analysis. Ratio analysis is the most important tools of the financial analysis, which help to ascertain the financial conditions of the organizations. Various ratios are employed and grouped for the analysis of composition of working capital, liquidity position, activity or turnover position, profitability position and capital structure or leverage position.
A Total Assets Financing The total asset of the bank is financed through outside and inside financing. Higher the debt financing signals adoption of aggressive working capital policy and vice versa. B Total Debt Composition The total debt of the bank is composed of long term debt and short term debt. The short term debt is easy to obtain in comparison to long term debt. But, short term debt carries higher risk. Thus, higher use of short term debt to financing the working capital means the adoption of aggressive policy.
C Gross Working Capital Generally gross working capital means current assets. Thus, higher the current asset indicates higher gross working capital and eventually higher net working capital as well.
Under this, the growth rate of gross working capital within the five year period is analyzed. D Net Working Capital Growth The net working capital is the difference between the current assets and the current liabilities.
Lower the net working capital implies higher amount of short term financing and thus having aggressive policy and so on. The growth rate of net working capital is given by; E Working Capital Financing Policy This ratio measures the relationship between the short term debt capital and the current assets of the bank.
In other word, this ratio evaluates what percentage of the working capital has been financed through the short term debt, and thus enlightens on the working capital policy adopted. This ratio is germane to the management for making policy in the types of finance to be adopted. This ratio also shows the representation of working capital in total assets of the bank.
G Cash Reserve Ratio To ensure the security of the deposit holders, each bank has to keep certain percentage of the total local deposit collection as cash balance in NRB, as per the provision of NRB. Currently such requirement is 5. Thus, this ratio measures the liquidity to be maintained by the bank.
Higher the return on equity indicates that the bank has adopted aggressive working capital policy, and thus the bank is risk taker. It depicts the characteristic of the whole group. It is a representative of the entire mass of homogeneous data, its value lies somewhere in between the two extremes, i.
It is obtained by dividing the sum of the quantities by the number of items. It is the most usual measure of dispersion and it represents the square root of the variance of a group of numbers, i.
C Coefficient of Variation Karl Pearson developed this measurement to measure the relative dispersion. It is used in such problems where we want to compare the variability of two or more series. It is denoted by C. It helps us in determining the degree of relationship between two or more variables.
It doesn't tell us anything about cause and effect relationship. It describes not only the magnitude of correlation but also its direction. The coefficient of correlation is a number, which indicates to what extent two things variables are related to what extent variations in one go with the variations in the other. The zero correlation coefficient means the variables are uncorrected.
Significance of relationship has been tested by using the probable error P. It is considered as a useful tool for determining the strength of relationship between two or more variables. The regression line of Y on X is given by; G Trend Analysis A widely and most commonly used method to describe the trend is the method of least square.
Let the trend line between the dependent variable y and the independent variable x i. So this is the crucial part of this study. This chapter of has divided into three sub parts. The first part presents secondary data analysis, like as total assets financing, composition of debt, gross and net working capital status of selected Banks analyze which includes size, structure and utilization of current assets and current liabilities, liquidity and profitability position, relation between current assets and total assets as well as fixed assets, financing policies etc.
Second part focuses on presentation and analysis of primary data and finally third part presents major findings of the analysis. A good combination between these two funding is necessary for the optimal profit achievement.
The financing of total assets of the selected banks is presented in the Table: 4. Table: 4. The table reveals that each bank gives predilection to debt capital than equity capital while financing the total assets.
Looking individually, the equity capital of NIBL has followed increasing trend and thus has ranged from 7. Similarly, the debt financing of the bank has ranged from In average, NIBL has financed the total assets by 7. Also, the coefficient of variation in inside funding is 5. However, the percentage of debt financing in total assets of HBL has decreased during the period and the percentage of equity financing has increased simultaneously.
The equity financing to total assets of HBL has ranged from 6. Likewise, the debt financing to total assets has gradually decreased from In average, HBL financed 7. Similarly, the percentage of equity financing in EBL has fluctuating the percentage of debt financing has also irregular. The equity capital has ranged from 5. In average, the equity capital and debt capital have represented 6. The coefficient of variation on equity financing is 5.
Higher amount of short term debt than long term debt states that the bank is risk taker, while the opposite states that the bank is risk averter. This ratio indicates on which debt capital is the bank focusing in financing the working capital. The table depicts that all the banks have extensively used short term debt than long term debt.
Thus, long term debt represents 1. In average the long term covers only 2. The long term debt financing percentage and short term debt financing percentage, however, in HBL are in fluctuating trend and thus the long term debt financing percentage has ranged from 0. The short term debt financing percentage has ranged from In average, the long term debt financing and short term debt financing have represented 1.
Similarly, the long term debt capital percentage has followed decreasing trend and the short term debt capital percentage has followed increasing trend for the first four fiscal years in EBL. The short term debt capital and long term debt capital have represented Short term debt has ranged from In average, the short term debt and long term debt represent 2. Also, the variation in long term debt financing percentage is extensively higher than that of short term debt financing.
Considering the composition of total debt capital, it can be assumed that the working capital of the banks is much riskier, since uses of higher short term debt demands repayment in every few month, which ultimately desires higher liquidity and thus can cause bankruptcy in case of low current assets. Further, the interest rates on short term debt fluctuate widely than in long term debt.
The below table 4. Higher the gross working capital indicates higher liquidity. Clearly, the gross working capital of the banks has gradually increased during the periods. In average, the bank has maintained Rs. And the coefficient of variation in the working capital is 5.
Further the growth rate of working capital has varied from 7. In average, the growth rate of working capital is 5. In average the working capital of HBL is Rs. Also, the growth rate of working capital has ranged from The average growth rate in gross working capital of bank is 8. Similarly, the gross working capital of EBL has increased from Rs.
Consequently the growth rate in gross working capital of EBL has ranged from In average, the gross working capital of EBL is Rs. Similarly, the working capital of the bank has grown up by 7. Summarizing the analysis, it can be concluded that the banks have paid attention to increase the gross working capital to have sound liquidity management.
Higher the current asset than short term debt demands higher amount of other capital, either long term debt capital or equity capital. It is clear that the net working capital of NIBL is in increasing trend within the five year periods. The net working capital of such bank is lowest, i. In average, the net working capital of the bank is Rs. The highest growth rate is In average the net working capital of the bank has been raised by This indicates that increment in the gross working capital and the increment in short term debt have differed.
The net working capital is lowest, Rs. However, the net working capital in EBL has increased by near about 3 times within the five year periods and thus has reached to Rs. In average, the net working capital of EBL is Rs. Also, the growth rate of NWC has ranged from In average, the NWC is Rs. The table clearly indicates that the banks have given more concentrations in increasing the current assets by greater amount than increasing the current liabilities.
Thus it can be concluded that the banks are following aggressive working capital policy, since the short term debt has been extensively used to finance current assets.
Even though the net working capital of NABIL is highest, the growth rate in net working capital of EBL is highest, from which it can be considered that EBL has paid greatest attention in increasing net working capital than other does.
This indicates that the short term debt financing is also extensively used to finance the working capital. The table shows that the banks use extensive amount of short term debt to finance the gross working capital. The financing of working capital in NIBL through short term debt is in fluctuating trend, although it is higher, and thus has ranged from In average, NIBL has financed In average, HBL has financed Likewise, the short term debt has covered In average, EBL has financed Similarly, the short term debt to working capital of NABIL has been fluctuated during the periods, and thus is maximum, In average, the short term debt has covered The coefficient of variation indicates high uniformity ratio in the policy.
Further, the extensive use of short term financing indicates that the banks are risk taker and thus demand higher liquidity. Among the four banks, HBL can be considered as the higher risk taker bank, since the utilization of short term debt capital percentage on working capital is highest.
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