NJMSR 2021

DOI: https://doi.org/10.53056/njmsr-2016001 https://www.nepjol.info/index.
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ISSN (Print) : 2467-9356

ISSN (Electronic) : 2795-1545
Volume - IV Issue-I December 2021
NJMSR
Nepalese Journal of Management Science and Research
(NEPJOL INDEXED)
An Official Publication of Global College International
NJMSR Volume IV Issue I

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https://www.nepjol.info/index.php/njmsr/index ISSN (Print) : 2467-9356, ISSN (Electronic) : 2795-1545
DOI: https://doi.org/10.53056/njmsr-2016001 https://www.nepjol.info/index.php/njmsr/index
ISSN (Print) : 2467-9356

ISSN (Electronic) : 2795-1545
NEPALESE JOURNAL OF MANAGEMENT SCIENCE & RESEARCH

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Volume - IV I Issue-I I December 2021
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Nepalese Journal of Management Science and Research-NJMSR (Vol.4th, Issue.1) is an institutional
publication of Global College International-GCI affiliated to Mid-West University, Nepal. GCI is a
renowned academic institution of higher education in management currently operating different programs
at bachelor and master level. The main academic programs include BBA, BHM, BTTM, and MBA and
are aligned with professional training, leadership and business incubation, international relations, and
research and innovation. The College operates all its educational programs in the academically standard
and benchmark learning environment mentored by the professionals who are also experienced subject
experts enjoying prodigious academic reputation internationally and within across the country for their
research career. As such, GCI is regarded as a distinct benchmark for its academic legacy along with
the teaching-learning practice idealized with the philosophy; education for Global citizenship. As a
pioneer, GCI is powered by the involvement of researchers having national and international profile,
eminent academicians and competent learner groups as its human assets. This combination of knowledge
communities and competent minds is brought together with the external educational process that thereby
interfaces student centric pedagogy and multi-faceted academic system at GCI. The enrichment of
advance educational system is what that makes GCI stand out to be a distinct academic platform identical
to be a very active research center established to impart quality education.
Within the transformative design of education, a number of context relevant core and extra-curricular
engagements are integrated that become instrumental to building the academic system of GCI a very
interactive and experiential platform when research is automatized to enter as a key tool. This lends space
for the aspirant communities of scholars not only receive subject-based information passively from the
one way delivery drills but also it enables practitioners to create knowledge by undertaking plentiful
research projects and accomplishments on achieving learning excellence that is claimed to result in
education from action of innovation.
Following the research blended academic concept, GCI has embraced the policy to publish scientific
journal as a research tool integrated with the international conference participated by researchers, scholarly
practitioners, professors, business leaders, and intellectual persons of national and international repute
making dissemination of research knowledge relating to the diverse key areas of business management,
development and economics. NJMSR allows research minds to come together and make tangible
contribution in developing research practice as a medium to innovation. It lends space to the selected
researchers who get their projects and research papers published in scientifically generating knowledge
and add to management discourse. It is therefore, NJMSR contributes positively to expand intellectual
thought process that will be instrumental for learning to happen at the nexus of theory and practice.
Since the publication of NJMSR first in the year 2018, this manuscript has been endorsed as vital medium
not only in involving the academic communities in research but also pushing further education as a
whole to connect with processes that could develop new capabilities resulting from learning at the nexus
of theory and practice that the scholarly circles are required to substantiate in thinking and action both.
NJMSR includes for scientific publication systematically selected works that foster critical thinking,
creativity, academic and professional skill in practitioners. This publication has been very helpful to
connecting partner institutions, international academia, faculty and students together in research action
and dissemination of knowledge as constructive channels and tools to achieving academic excellence.
This third volume of NJMSR has selected twelve research papers contributed by the researchers
from national and international repute. The selected works are recognized for updating with research
knowledge validated by means of statistical analyses of empirical findings together with qualitatively

v
analysed insights relating to the diverse subjects and areas of management. Each article included in the
4th volume of NJMSR was peer reviewed by professional minds who were selected for their notable
expertise in the field. Scientific criteria such as topical construct, research design, statistical and analytical
tools used, content validity and organization manifested in the submitted paper were considered in peer
review specially to make decision for selection of submitted paper. The research analyses in the submitted
papers were assessed to ensure whether the results obtained were based on valid criteria or not.
Keeping with the key premiers of a scientific publication, 4th volume of NJMSR has with priority
selected primary data based research papers. Selection of secondary sources of analysis based papers has
been decided in recognition to quality the papers have stood true to. There are mostly primary data based
papers in this volume together with a few ones based on their secondary analyses that too bring insights
on a diverse issues that fall in the concern of management discourse. In addition to the analytical aspects,
selection of each manuscript has been decided at the virtue of content, research design, and structure of
content organizing that essentially comply with the standard criteria of academic writing. The papers in
this issue as based on empirical research in addition to secondary sources analyses have touch upon and
communicate research insights that have been briefly highlighted from each work as given here:
In the paper titled; Fintech, Regtech and Suptech: Three Dimensional Approaches to Digital Finance,
G.V.Satya Sekhar explores some special dynamics regarding how Fintech, Regtech, and Suptech as three
stage approach to digital finance work and will become the better substitute of banks and other financial
systems. Based on review of secondary sources, this paper highlights: 1. the problems and obstacles faced
by corporate entities in digital finance and 2. the interdependency of three dimensions of technology viz.,
Fintech, Regtech and Suptech.
In his primary data based survey research; An Assessment of Personality-Type of Managers in Nepalese
Hotel Industries, Analysis, Kapil Khanal sheds light on the female managers generally with participative
style while governing people, whereas, male managers are argued to be induced toward an autocratic
or directive style in their daily performance. The study articulates extraversion dimension for having a
more significant effect than the openness dimension. It is reported to have negative effect on extrinsic job
satisfaction, while the openness dimension is reported for positive effect.
Using the three industry standard risk-adjusted returns parameters such as Sharpe ratio, Treynor Ratio
and Jensen’s alpha in their paper titled; COVID-19 The Global Pandemic: Learning & Take Out for
National Pension System (NPS), Linking the case pension, the authors Haladhara Sahu and Ritu Sapra
investigate the impacts of pandemic on fund manager’s risk returns profile. As such the study evaluates
the performance of selected NPS pension fund managers and has also explored the learning from such
unexpected crisis for the policy makers for future preparedness. On the basis of finding, it has suggested
some measures for long run sustainability of schemes for the national organizations such as NPS.
Using quantitative analytical methodological procedures, Dhundi Raj Bhattarai has investigated the Impact
of Capital and Deposit on Financial Performance of Commercial Banks in Nepal. The descriptive, causal
comparative analyses show relationships of characteristics of core capital ratio, bank capital, deposit, net
profit after tax, and earnings per share. These also measure the individual impact of core capital ratio,
bank capital, and deposit on financial performance i.e., net profit after tax (NPAT) and earnings per share
(EPS). As such the study suggests that the banks should adopt the policy that helps practicing healthy and
progressive ways to inject capital and deposits for better financial performance in conclusion.
Linking the banking issue, in his study titled; Impact of Firm Specific Factors on the Profitability and
Stock Price of Nepalese Commercial Banks, Manoj Kumar Bhatta examines firm specific factors for
their relation with profitability and stock price of the Nepalese commercial banks. The study has relays
significant relationship between bonus share and stock price of the commercial banks whereas other
vi NJMSR Volume IV Issue I

ISSN (Print) : 2467-9356, ISSN (Electronic) : 2795-1545 DOI: https://doi.org/10.53056/njmsr-2016001
variables are mentioned to have had insignificant relation with the stock price. As such the study concludes
that profitability can be increased by reducing the NPL.
Machindra Thapa in his paper; Impact of Porter’s Generic Strategy on Firm Performance with reference
to Nepalese Retail Banking Sector draws on the concept propounded by Porter called generic strategies
as being the proven and pervasive strategic options in achieving competitiveness and better firm
performance. On a causal and comparative design, this study examines the effect of Porter’s generic
strategies (low-cost, differentiation, and focus) on firm performance in the context of Nepalese retail
banks, a more competitive service industry. The empirical results inform the consistent results indicating
positive associations between generic strategies and firm performance. The regression results declare
higher positive and significant impact of low-cost on firm performance. The findings suggest pursuing
low-cost strategy as instrumental to provide more financial returns with comparison to differentiation
and focus strategies. The study thus suggests combination of low-cost and differentiation (and focus)
strategies that could provide better competitiveness and firm performance.
Using Banking sub-index and index relative of different periods analysis, Joginder Goet in his paper titled
Impact of Right Share Issue on Share Price of Commercial Banks in Nepal examines the effect of issue
of right share on share price movement in the banking sector in that share price and price relative are
used as the predictors of share price movement. The correlation and regression analyses reveal that right
share announcements have the signaling effect on share price movement. The share prices and banking
indices of selected banks have decreased after the announcement of right share. As such the study results
suggest information irregularity behavior as the key tempters of negative change in share price after the
announcement of rights share. The implication is that investors can forestall the nature of change in share
price after rights issue announcement and develop strategic plans to expand the trading activity.
Embracing the issue of human resource, in his paper titled; Conceptualizing Intersectionality between
Work-family Conflict and Career Progress of Married Women Employed in Nepalese Financial Sector,
Gaurav Ojha examines the intersectional relationship between work-family conflict and career progress of
married women employed in the financial sector within Kathmandu Valley. It conceptualizes work-family
conflict by examining the intersectional relationship between socio-demographic factors, antecedents
of work-family conflict and career progress of married women employees in the context of Nepalese
Financial Sector. Results of both descriptive and inferential statistics indicate that asymmetry still remains
prevalent and permeable among married women employees regarding their work-family interfaces and
involvements. As such, it maintains that the antecedents of work family conflict intersect a predictive
association with subsequent existential experiences, ambition gaps and perceptions that negatively
influences career progress of married women. In conclusion, this study recommends a sustainable
corporate culture and human resources management practices that remains sensitive to gender issues and
also assimilates complex and conflicting necessities of both work and family involvements.
Concerning the women entrepreneurship as an emerging topic, in their study titled; Empowerment of
Women through Entrepreneurship Development in Emerging Economies: A Case of India, Siby Abraham,
Himachalam Dasaraju, and Jency Treesa bring an overview on women empowerment through women
entrepreneurship development in the emerging economies. It reviews women empowerment, female
entrepreneurship, gender equity, institutional support and problems of women in rural areas. As part of
practical solutions this study suggests physical, material and technical supports to be extended to the
women entrepreneurs in order to get success and empower the women themselves. In conclusion, the
study provides further insights on the relationship between women empowerment and entrepreneurship
and needs to focus special attention on promoting women empowerment as a part of UN sustainable
development goals.

vii
Deriving insights from the Indian context, in their study titled; Confronting the Challenges to Equipoise:
A Study on Wompreneurs' Work-Life Balance, Sanjay Kumar Satapathy and Anita Pareek explore the
adversities faced by wompreneurs (Women Entrepreneurs) of Odisha and talks about their work-life
balance issues. The paper presents the viewpoint (motivation) of wompreneurs as to why they think of
starting an enterprise of their own. Drawing on further, this study argues in India, where wompreneurs are
expected to have a better work-life balance as they are their own "boss.
Concerning consumer knowledge and awareness about the commodities that fall in the cosmetic
categories, Seeprata Parajuli , Bhawana Thapa , Niranjan Devkota , Udaya Raj Paudel, and Saraswati
Gautam in their paper titled; Female Consumers Awareness Level on Purchasing Online Beauty Products
in Kathmandu Valley, highlight some new insights. The study reveals that mostly females are aware
about the online purchase of cosmetic products. Likewise, both literate and illiterate women use online
platforms to buy cosmetic products, though the ratio of literate women is higher. Also, the trend to buy
cosmetics product is higher in unmarried compared to married females. Thus, the study concludes that
effectiveness of online beauty products can be enhanced if the online sites focus on delivering quality
products in reliable price to customers.
Finally focusing on the IT role in our developmental endeavors such as education, in his review based
study titled; A Systematic Review on Blockchain in Education: Opportunities and Challenges, Navin
Duwadi discusse Bloackchain as an emerging technology regarding its use to restructure the systems and
advance education upon quality outcomes. The study introduces some intriguing questions that need to
be answered on the research level. This is the most highlighted question e.g.; What are the benefits of
integrating blockchain in education concerning system reformation and advancement in developing better
educational process for all encompassing learning outcomes?
To conclude, with the incorporation of empirical and secondary sources of literature and data based
research papers, it has come out that this 4th Volume of NJMSR claims its scientific status also validated
with peer reviews of each submission selected and included in this issue. As such, this very academic
manuscript is expected to make an intellectual contribution with the strength of research knowledge
disseminated in conveyance of a number of areas and issues that are of major concern for management
science that seeks to reinforce real management and leadership practices with the lenses of research based
discourses. As this scientific publication wouldn’t have come into the form as here without substantial
support and contribution of researchers, peer reviewers and scientific and academic writing experts, we
would like to express our sincere acknowledgement to each and all whose papers are included in this
volume. We would like to express our special thanks to the advisory members of scientific committee
including international advisors, committee members, managing editor, publishing team, designers and
all who shall be beneficiaries of this 4th volume of NJMSR. Constructive feedback, comments and
corrections are welcome from the readers.
With sincere acknowledgement to all for your intellectual contribution,
Dev Raj Paneru, PhD (EDiTE)

Chief Editor
NJMSR-2021 (Vol-4, Issue-1)
viii NJMSR Volume IV Issue I

CONTENTS
Fintech, Regtech and Suptech: Three Dimensional Approaches to Digital Finance

G.V.Satya Sekhar 1
An Assessment of Personality-Type of Managers in Nepalese Hotel Industries

Kapil Khanal 15
COVID-19 The Global Pandemic: Learning & Take Out for National Pension
System (NPS)
Haladhara Sahu, Ritu Sapra 30
The Impact of Capital and Deposit on Financial Performance of Commercial

Banks in Nepal
Dhundi Raj Bhattarai, Ph. D. 51
Impact of Firm Specific Factors on the Profitability and Stock Price of Nepalese
Commercial Banks
Manoj Kumar Bhatta 66
Impact of Porter’s Generic Strategy on Firm Performance with reference to

Nepalese Retail Banking Sector
Makshindra Thapa 80
Impact of Right Share Issue on Share Price of Commercial Banks in Nepal

Joginder Goet 96
Conceptualizing Intersectionality between Work-family Conflict and Career

Progress of Married Women Employed in Nepalese Financial Sector
Gaurav Ojha 108
Empowerment of Women through Entrepreneurship Development in Emerging

Economies: A Case of India
Siby Abraham, Himachalam Dasaraju, Jency Treesa 127

ix
Confronting the Challenges to Equipoise: A Study on Wompreneurs' Work-Life
Balance
Sanjay Kumar Satapathy, Anita Pareek 145
Female Consumers Awareness Level on Purchasing Online Beauty Products in

Kathmandu Valley
Seeprata Parajuli, Bhawana Thapa, Niranjan Devkota, Udaya Raj Paudel, &
Saraswati Gautam 161
A Systematic Review on Blockchain in Education: Opportunities and Challenges

Navin Duwadi1 178
x NJMSR Volume IV Issue I

Notes
Articles are subject to editorial by referees from the community of management and
economics. Comments or notes regarding articles are welcome and will be considered for
publication to the extent possible. The opinions and the interpretations expressed in the
articles are the personal opinions of the authors and reviewers and do not necessarily reflect
the views of the publisher and editors, or of any institution with the information with which
the author may be associated. The editorial board does not guarantee the accuracy of the
data and the information included in the articles and accepts no responsibility, whatsoever,
for any consequences of their use.
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xii NJMSR Volume IV Issue I

Fintech, Regtech and Suptech: Three
Dimensional Approaches to Digital Finance
G.V. Satya Sekhar1
Abstract
Every institution is now doing business transactions through digital financing system. Digital
financing solutions offer great potential to overcome challenges and contribute toward
achieving universal access to financial services. However, it is noticed that insufficiency
of technological up-gradation and various issues created by hackers that might include
fraudulent online transactions as an example, hampers people who are not aware of the other
side of technology.
There are three stages in the implementation of digital finance viz., Fintech, Regtech and
Suptech. ‘Fintech’ is an application of Technology for financial services that include; digital
payments and e-money, international remittances, personal and business loans, peer-to-
peer lending platforms, crowd funding platforms, Robo-advisors, Crypto currencies like
Bitcoin, Altcoin, etc. ‘Regtech’ is a contraction of the terms ‘regulatory' and 'technology'
and it describes the context of regulatory monitoring, reporting, and compliance. ‘Suptech’
is derived from ‘Supervision’ and ‘Technology’, which monitors ‘Fintech' and ‘Regtech’.
The rise of Fintech will undermine the widespread assumption that the primary source of
systemic risk in the financial sector is the domination of large, “systemically important”
banks and other financial institutions. On this backdrop, this paper aimed to explore the
importance of Fintech, Regtech, and Suptech as three stage approach to digital finance.
This paper makes a focus as the special dynamics regarding how Fintech, Regtech, and
Suptech as three stage approach to digital finance work and will become the better substitute
of banks and other financial systems. Based on review of secondary sources, this paper
highlights: 1. the problems and obstacles faced by corporate entities in digital finance and 2.
the interdependency of three dimensions of technology viz., Fintech, Regtech and Suptech.
Keywords: Digital finance, Financial literacy, Fintech, Regtech and Suptech.
1 G.V.Satya Sekhar is the Associate Professor for GITAM Deemed to be University, Visakhapatnam-India.

1
1. Introduction
1.1 Background
Every institution is now doing business transactions through digital financing system. Digital
technological solutions offer great potential to overcome challenges and contribute toward
achieving universal access to financial services. But, it is noticed that various issues created
by hackers, fraudulent online transactions, insufficiency of technological up-gradation
hampers people who are not aware of the other side of technology.
There are three stages in implementation of digital finance viz., Fintech, Regtech and Suptech.
Whereas, ‘Fintech’ is an application of Technology for financial services, for instance: digital
payments and e-money, international remittances, personal and business loans, peer-to-peer
lending platforms, crowd funding platforms, Robo-advisors, Crypto currencies like Bitcoin,
Altcoin, etc. The word ‘Regtech’ is a contraction of the terms ‘regulatory' and 'technology'
and describes the context of regulatory monitoring, reporting, and compliance. The word
‘Suptech’ is derived from ‘Supervision’ and ‘Technology’, which regulates ‘Fintech' and
'Regtech’. The rise of Fintechwill undermine the widespread assumption that the primary
source of systemic risk in the financial sector is the domination of large, “systemically
important” banks and other financial institutions.
1.2 Problems concerning the technologies of financial

transactions:
To implement digital finance in corporate entities, it should have technical know-how
of three aspects viz., Fintech, Regtech and Suptech. These three are interdependent and
cannot be isolated. There are various threats like Hacking, manipulation, Hardware failure,
Software failure; lapses in programming, lack of customization in software etc. are some of
major problems in implementation of digital finance. A small lapse in software costs very
huge loss to corporate entity.
1.3 Objectives
1.3.1 General objective
To understand the problems concerning in the digitalization of financial transactions.
1.3.2 Specific objectives:

To understand the interrelation between Fintech, Regtech, and Sup-tech.
To make appraise of a three dimensional approach to digital finance and the role of Fintech,
Regtech and Suptech in digital finance.
2 NJMSR Volume IV Issue I

2. Review of Literature
The growing need of financial innovation and use of technology in stimulating economic
growth and businesses operations indeed can be viewed by explaining functions it has
performed (Miller & Merton, 1992).It is necessary to take a close look at the main features
of the current wave of financial innovation and evaluate objectively. It is also essential to
identify the lessons that are learned from the economic change and innovation (Verghese,
1990).The factors primarily responsible for technological advancement are: innovation in
financial instruments, financial processes, financial strategies based on the tax advantages,
reduction of risk of volatility in interest rates, reallocation of risk, increase in liquidity, etc
(Finnerty, 2002).
What financial product and process changes have occurred over the last twenty to twenty-five
years in international financial markets? What is the assessment of the recent developments
surrounding financial innovation, including their financial stability and national policy-
making impact? These questions are addressed in a study conducted by Richard Levich
et al., (1988).The innovated financial technology has created various business models as
well as new customer needs. They affect different aspects of the economics, including the
payment services, the banking industry, and the financial regulations (Salmony, 2014). The
internet was able to connect and be widely used in most countries around the world, and so
it became an invaluable support tool for the ongoing development of Fintech (Desai, 2015).
The Indian exchanges of the digital money are gearing up to launch Bitcoin futures; but first,
they want to integrate other crypto-currencies such as Ethereum, Ripple, and Bitcoin Cash
(BCH) on their platform (Kurup, 2017). Other than bitcoins, there are about 1,000 alternative
coins (Altcoins) in the global market, with Ethereum being the most popular. Altcoins are
crypto-currencies that were launched after the success of Bitcoin. In India, Bitcoins have
been available since 2012, and now have 8-9 trading platforms and over a million users”.
Fintech poses a set of unique challenges to financial regulation, challenges that require us
to question many of our fundamental understandings about the creation and propagation of
systemic risk in the economy. In particular, the rise of Fintech will undermine the widespread
assumption that the primary source of systemic risk in the financial sector is the domination
of large, “systemically important” banks and other financial institutions (William, 2018).” It
was found that regulations tend to spur a series of financial innovations. There exists a positive
relationship between education and income and use of the new financial Technology by
consumers. Financial innovators tend to gain by first mover advantages and re compensated
well for their efforts (Frame et al.,2004).
Vasanth and Stein (2017) mentioned that “we examine the potential trajectories and impacts
of Fintech innovation on incumbent and new business models in the finance industry. We
provide a framework for understanding the value created through various types of platforms
in financial services. This framework provides a natural mechanism for thinking about
Fintech winners and losers and for predicting the trajectory of changes in the industry. It

3
also provides a description of the possible strategies that innovators, incumbents, and the
currently dominant Internet players can pursue.”
Arner et al., (2015) examined the evolution of Fintech using a broad definition of the term
that proposed that all incumbent and new financial companies and industry participants
could be regarded as Fintech, regardless of their size, business model or product portfolio.
Legislators are currently struggling to fit Fintech into existing legal frameworks, as
these were designed for a different environment consisting of large, traditional financial
institutions. Too much regulation can burden innovation efforts, while under-regulation can
impose an unfair advantage on new entrants due to their lower legal costs and overheads,
and create higher social costs due to fraudulent activity and non-existent customer protection
(Douglas, 2016).
The 2008 global financial crisis represented a pivotal moment that separated prior phases of
the development of financial Technology (Fintech) and regulatory Technology (Regtech) from
the current paradigm (Douglas et al., 2017). In addition to this, the recent pandemic situation
and phase-wise lockdown during 2020-2021, also necessitated the Regtech mechanism to
monitor Fintech and Suptech systems. The following diagram shows interrelation between
these stages.
RegTech to date has focused on the digitization of manual reporting and compliance
processes, for example in the context of know-your-customer requirements. This offers
tremendous cost savings to the financial services industry and regulators. However, the
potential of RegTech is far greater – it could enable a close to real-time and proportionate
regulatory regime that identifies and addresses risk while also facilitating more efficient
regulatory compliance (Arner et al., 2016).
Figure-1: Three Stage Approach to Digital Finance
DIGITAL FINANCE
IMPLEMENTATION
SUPTECH
REG TECH
FINTECH

3. Methodology
This review paper is addressed various issues like: i) organized literature, ii) evaluate relevant
literature, iii) identified patterns and trends in the literature, iv) synthesized literature and v)
finally research gaps and recommend new research areas.
The studies reveal that the smartcards are slowly replaced by mobile wallets even though
there are hackers and fraudulent call centre operators are cheating people. At the same time,
crowd funding is becoming popular tool for venture finance.
This paper made focus of literature on genesis of financial innovation, digital currency,
fintech, regtech and suptech. The following insights are found:
i. There is a dire need for financial innovation and secured financial products for
implementation of digital finance in corporate sector (Finnerty, 2002).
ii. There are many doubts about legal sanctity for Bitcoins for business operation in India
( Kurup, 2017).
iii. The lapses in implementation of fintech, Regtech and Suptech lead to huge amount of
loss to corporate entities (Vasanth, & Stein 2017).
iv. Financial innovators tend to gain by first mover advantages and re compensated well
for their efforts (Frame et al., 2004).
v. Too much regulation can burden innovation efforts, while under-regulation can impose
an unfair advantage on new entrants due to their lower legal costs and overheads,
and create higher social costs due to fraudulent activity and non-existent customer
protection (Douglas, 2016).
vi. RegTech solutions can be designed to paint a 360-degree view of compliance and risk in
real-time, while single-rule solutions are aimed at one specific area.2
4. Results and Discussions

4.1 Structure and functions of fintech
The origin of Fintech is said to be the year 1918, during this time, ‘The Telegraph Inc.' played
a very important role in transfer of money from bank to bank using Fedwire Funds Service.
Credit card was invented in 1950. The first electronic stock market was established in 1970.
Net banking evolved during 1990s. At present, smart phones and mobile applications are
developed. Now, we can transfer money for financial transactions through smart phones.
2 https://www.ncontracts.com/nsight-blog/what-you-need-to-know-regtech-vs-suptech

5
4.2 The framework of fintech: Figure 2 depicts the framework of

Fintech
4.2.1 Smart cards
The recent developments in software applications viz., UPI, Paytm, Phone-pe etc., offers
the greatest scope for competition with the traditional sector, as these tech companies can
leverage off their pre-existing large customer bases to roll out new financial products and
services. These mobile apps are reducing demand for SMART cards.
4.2.2 Mobile wallets

A mobile wallet application like GooglePay, AndroidPay, ApplePay, Alipay, PayPal are used
for electronic payments. One has to download the particular mobile wallet app on their
phone and add information of their debit/credit card details which will be stored securely.
However, hacking through fraudulent calls are obstacles to this type of payment.
4.2.4 ONLINE/Net banking

Electronic Clearing System (ECS): ECS is an electronics mode of payment/receipt for
transactions that are repetitive and periodic in nature. ECS is used by institutions for making
bulk payment or bulk collection of amounts. Essentially, ECS facilitates bulk transfer of
monies from one bank account to many bank accounts or vice versa.
• Real Time Gross Settlement (RTGS): This enables money to move from one bank to
another on a real time and gross basis. ‘Real time’ means the beneficiary bank receives
the instructions for fund transfer immediately and gross means that it is not bunched
with any other transaction and funds transfer instructions happen individually. RTGS
is the fastest mode of fund transfer, which is secure and irrevocable. This adds to the
present fund transfer channels available to the customers.
• National Electronic Funds Transfer (NEFT): This is a nation-wide payment system
facilitating one-to-one funds transfer. Under this Scheme, account holders can
electronically transfer funds from any bank branch to any individual, firm or corporate
having an account with any other bank branch across globe. Like RTGS, NEFT also
transfers funds from one bank, but unlike RTGS the settlement takes place in batches.
• Cheque Truncation System (CTS): The process of sending the cheque in electronic
image form by the collecting bank to the paying bank, transmitted to the drawee branch
for payment through the clearing house is called CTS. This system eliminates the
cumbersome physical presentation of the cheque to the paying bank.
4.3 Digital currencies (D.C.s)

Digital currencies (D.C.s) are issued by private developers and denominated in their own
unit of account. They are obtained, stored, accessed, and transacted electronically and
neither denominated in any sovereign currency nor issued or backed by any government or
central bank. D.C. schemes comprise two key elements: (i) digital representation of value

or 'currency' that can be transferred between parties; and (ii) the way in which value is
transferred from a payer to a payee. Bitcoin is a popular example of Digital Currency. It helps
to facilitate peer-to-peer exchange at low transactional costs and faster transaction time. D.C.
schemes are also known as 'crypto currencies' as it uses cryptographic techniques. Crypto
currencies derive their value from the expectation that others will be willing to exchange it
for sovereign currency or goods and services. The inferences of D.C.s for financial firms,
markets and system will depend on the extent of its acceptability among users.
4.4 Crowd funding

Crowd funding is a way of raising debt and equity with a collective effort of multiple
investors through an internet based platform. A small amount of money is pooled from
numerous investors to invest in a new venture. It is a platform that matches borrowers or
issuers with savers or investors. This Platform providers offer a range of information about
the potential borrowers/issuers, ranging from credit ratings to business model to verification
of information. Crowd funding is also known as Peer-to-Peer Lending (P2P), wherein money
is lent to individuals or businesses through online services.
4.5 An overview of regtech

Figure 3 is given to make aware of the structure of Regtech.
Regtech is used to regulate and monitor transactions relating to digital finance. Banking and
financial institutions today have a lot to gain from Regtech. Keeping in mind the growing list
of regulatory obligations financial organizations have to comply with, and the consequences
of noncompliance and the large fines associated with this.
RegTech's ability to deliver tools to reach compliance more quickly, and at a lower cost,
is a huge benefit for organizations and will give early adopters a competitive advantage.
Early adopters and organizations who implement Regtech into their governance, risk and
compliance strategies will be the beneficiaries. For many processes, especially those that
heavily involve client data like Know Your Customer (KYC) requirements, the end customer
also receives an enhanced experience by having a more streamlined process in place.
Organizations that use Technology to safeguard against breaches and protect client data will
also benefit the client. The following are various applications used in Regtech.
4.5.1 Smart contracts

A smart contract is a computer protocol that can self-execute, self-enforce, self-verify,
and self-constrain the performance of a contract. It allows the performance of credible
transactions without third parties. The widespread adoption of smart contracts in financial
services could be facilitated by the establishment of distributed ledger technology. Smart
contracts allow to perform credible transactions without third parties. These transactions are
trackable and irreversible.

7
4.5.2 Cloud based service

Cloud-based services can deliver internet-based access to a shared pool of computing
resources that can be quickly and easily deployed. The use of these services is an important
enabler for new entrants to the financial services arena to set up quickly and with low start-up
cost, with easy options to expand their capability as the firm grows. Depending on the type
of services of the cloud service availed; it can potentially pose several challenges including
the ability of jurisdictional enforcement authorities to effectively ensure security of data.
4.5.3 Robo advice

It is the provision of financial advice by automated, money management providers, thereby
disintermediation of human financial advisors and reducing costs. It can offer more investor
choice, especially for low and middle income investors who do not have access to the wealth
management divisions of the banks. They use client information and algorithms to develop
automated portfolio allocation and investment recommendations that are meant to be tailored
to the individual client.
4.5.4 Data analytics

Companies looking to achieve a competitive edge through ‘Artificial Intelligence’ (AI) need
to work through the implications of machines that can learn, conduct human interactions,
and engage in other high-level functions at an unmatched scale and speed. They need to
identify what machines do better than humans and vice versa, develop complementary
roles and responsibilities for each, and redesign processes accordingly. AI often requires,
for example, a new structure, of both centralized and decentralized activities, that can be
challenging to implement.
4.5.5 Classification of suptech applications

Figure 3 shows interdependency of Fintech and Regtech and its monitoring technology viz.,
Suptech. The Technology used for supervision and decision making is called 'Suptech'. The
following are various applications relating to Suptech.
4.5.6 Applications of artificial intelligence (A.I.)

AI is a branch of computer science that deals with the concept of intelligent machines. It is
based on the principles of how humans think and reason and making the machine emulate
the same. The way humans' reason based on the knowledge and past experiences, AI too
reasons based on data and learning algorithms (Poole and Mackworth, 2017). Machine
learning and Robotics are the major fields in the area of Artificial Intelligence. Artificial
intelligence provides customized experience, efficiency, improvement in productivity and
all together cost reduction. Recent emerging applications in finance sector are blockchain,
chatboats, personalised financial advice and fraud detection mechanism. As a result of the
government’s initiatives, there has been a sharp increase in consumer adoption of Fintech.

4.5.7 Fraud detection

People are creatures of habit, and a slight change in their routine could signal a problem.
Accessing internet banking from a different browser or transferring larger amounts than
normal are signs of a possible fraud. The A.I. should be able to detect if this is a real threat or
a one of a kind situation by correlating other readily available information about the client.
4.5.8 Chatboats
Chatboats are also implemented by financial institutions to help customers navigate through
products and feel they matter. For simple operations, most people wouldn't be able to
tell if they are talking to a real person following a script or a boat driven by A.I. From
simple customer service interactions to analyzing legal contracts, A.I. chatboats are rapidly
becoming more and more prevalent in our day-to-day lives.
4.5.9 Physical and digital merger

Fintech has made it possible for banks to reach customers who are data rich but credit poor. In a
country like India, where so many people still don’t have access to banking facilities, Fintech
works better by offering a ‘phygital’ (a combination of physical and digital) experience. The
objective here is effective self-service that enables customers to walk into a branch and make
use of basic automated services. Canara Bank has successfully implemented such a system
with CANDI, and more banks will follow suit in 2018 to remove the boundaries between
physical and digital banking (yourstory.com).
4.5.10 Cognitive analytics

Cognitive solutions may be deployed from the cloud and offered as a hosted service or may
be deployed on in-house servers depending on the organisational requirements. In digital
banking, there are several new applications of cognitive analytics and A.I. that are aimed at
improving customer experience, increasing engagement, gaining a deeper understanding of
customer behavior and making the customer interactions with the bank frictionless. In many
instances, AI-powered bots are already beginning to perform functions that require complex
thinking and contextual understanding.
4.5.11 Augmented reality (A.R.)

A.R. is the integration of virtual and real world. Unlike Virtual reality (V.R.), which creates
artificial environment, A.R. uses the existing environment thus creating a unique experience.
A.R. can be displayed by using smart devices such as smart phones or tablets. However,
with ongoing research on inclusion of A.R. functionality in other devices, future may see
a wide variety of ways to experience A.R. Innovative apps such as Layar, an iPhone app
provides local information whereas products like Tissot watches and Olympus Cameras
have webpages that enable to experience virtual products. Lego has point of sale display that
lets kids to play with the toy inside the box which they are holding.

9
4.5.12 Internet of things (IoT)

It is a concept of connecting devices that are embedded with some sort of electronics to
communicate with other devices as well as exchange data. It helps in extending the internet
services from standard devices such as computer, laptops and smart phones to everyday
objects like home appliances or vehicles. One can monitor or even control the devices
remotely using internet. IoT provides the basis for smart home solutions of automated
devices with no or less human intervention.
4.5.13 Big data tools

Enormous amounts of data are generated at every moment from different sources. It could
be structured, semi structured and unstructured. Social media has given rise to lots of data
that carries perceptions and useful insights that can be used by an organization for gaining
competitive edge. Technologies like NoSQL databases and the MapReduce model are
widely used in big data that helps in working with large amount of data. Big companies use
this Technology to store and analyze huge data and use it for precise user targeting, machine
learning, optical recognition and more.
4.5.14 Blockchain
Blockchain is a list of records called as blocks which are linked with cryptography. It is used
by crypto currencies. Blockchain provides a network that enables various stakeholders to
transact with trust, security and anonymity. Blockchain is essentially a distributed database
that contains a chronological order of all transactions or digital events that happened among
the participatory parties. All transactions in the network are represented in terms of block
and broadcasted to participants in the network, verified, time stamped and linked with the
prior blocks in the network to form a sequence of blocks known as Blockchain.
4.6 Forensic tols-A success factor for suptech

Forensic tools could also be used to navigate information systems for evidence of malfeasance
such as information deletion, violations in policies and unauthorized access. These tools can
help the company legal counsels to prepare for a lawsuit to be filed against the fraudster.
Apart from the internal controls, banks need to also educate the customers. Since the
methods used by cyber-criminals to target the sensitive financial data are sophisticated and
constantly changing, banks must look at existing security controls with a new approach and
risk appetite. Figure 4 depicts the framework of Suptech.
• Automated Analysis Tools: Today, the industry is increasingly aware of the need for
automated analysis tools that could easily identify and report fraud attempts in a timely
manner. Solution providers are now providing real-time transaction screening, third-
party screening as well as consent solutions.
• Data Visualization Tools: These are being used to provide a visual representation
of complex data and transaction patterns and outliers to translate multidimensional

data into meaningful pictures or graphics which could help the banks to easily track
troublesome digital footprints.
• Behavioral Analytics: This is helping the banks identify fraudsters disguised as
customers. The data analytics implemented by the banks to understand customer
behavior, preferences, etc are also helping in the detection of fraudulent activity either
in real-time.
• Deep Learning: Internet payment companies providing alternatives to traditional money
transfer methods are using deep machine learning, a new approach to machine learning
and artificial intelligence that is great at identifying complex patterns and characteristics
of cybercrime and online fraud.
4.7 Summary
This paper deals with three dimensional approaches viz., Fintech, Regtech and Suptech.
Everyone needs to understand technological concepts and tools involved in digital financial
world. As Fintech helps corporate entities to connect with customers via Technology,
Regtech helps them meet regulatory requirements via Technology. Regtech utilizes various
technologies such as machine learning and artificial intelligence to establish enterprise-
wide data governance and reporting. These new technologies replace the current manual
processes for modeling and reporting. With the ever-changing regulatory landscape, Regtech
enhances the ability for institutions to remain compliant with critical regulations such as
the Bank Secrecy Act (BSA), including know-your-customer (KYC) and suspicious activity
reporting. Regtech also simplifies the data-reporting requirements under a number of
regulations including such as Basel-3, CCAR, and MIFID II to name a few. Hence, it can be
concluded that ‘Fintech’. ‘Regtech’ and ‘Suptech’ should go hand-in-hand.
4.8 Discussion and conclusion

1. This paper finds that there is interdependency of three dimensions of digital finance
viz., Fntech, Regtech and Suptech.
2. There is a dire need to examine various characteristics like integrity, honesty and loyalty of
employees along with technological implementation in corporate entity.
3. Now-a-days we believe in machine (computer and software) rather than man to
supervise. If there are lapses in ‘Suptech’ then the other two aspects viz., Regtech and
Fintech will definitely fail.
4. Too much dependence on ‘Artificial Intelligence’ is also dangerous. The Bank of
England’s former chief economist, Andy Haldane makes comparison of human and
artificial intelligence decision-making capabilities.3
5. Researchers should think better ways to control frauds, hackers and manipulators to
prevent loss to corporate entities.
6. Corporate entities should make a suitable plan of action and design alternative to
detect frauds.
3. https://www.centralbanking.com/fintech/regtech-suptech/7869496/haldane-warns-against-blind-trust-in-ais

11
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Figure 2: The Framework of Fintech

2. Mobile Wallets:
Payment through
Mobile apps
3. Online/Net Banking
1.Smart cards:
ECS/ NEFT/RTGS/CTS
Debit cards/ Credit Cards/
Travel cards/Rupay cards
FINTECH-
OVERVIEW
4. Digital
5.Crowd Funding
Currencies-
Crypto Currencies
Source: Diagram prepared by author.
Figure 3: An Overview of Regtech

2. Cloud Based Service
3. ROBO ADVICE Regtech 1. Smart

An Overview Contracts
4. Data analytics

13
Figure 4: Suptech Diagram

2. Fraud Detection
1. Artificial Intelligence 4. Physical and

Digital Merger
Suptech
-Supervisory technology 5. Cognitive analysis
6. Augmented Reality
7. Internet of Things
3. Chat boats 8. Big Data Tools
9. Block Chain

An Assessment of Personality-Type of
Managers in Nepalese Hotel Industries
Kapil Khanal 1
Abstract
Hospitality industry is one of the most profitable industries with a high potential for increase,
thus being a hospitality manager is one of the most trendy and prestigious jobs of today.
It is also a challenging job since, being an effective one is quite complex due to recorded
industrial higher heart burn effects, rapid industrial changes in demand, constant trends
and severe industrial competition. The purpose of the study is to evaluate the performance
variance of the top managers of the five-star hotels of Nepal in respect with their gender.
The primary data were received from employees on different level, line-managers of five-
star hotels. Descriptive and explanatory research designs were used. Composite means and
correlation coefficients models were used to analyze and interpret the data.
Analysis showed that the female managers generally tend to adopt democratic or participative
style while governing people, whereas, male managers induce an autocratic or directive
style in their daily performance. Based on the regression analysis, it was determined that
the extraversion dimension had a more significant effect than the openness dimension. The
extraversion dimension had a negative effect on extrinsic job satisfaction, while the openness
dimension had a positive effect. The extraversion and openness dimensions had a weak but
statistically significant effect on general job satisfaction. The extraversion dimension had
a negative effect on general job satisfaction, while the openness dimension had a positive
effect.
Keywords: Five-star hotel, Managers' type, Personality-type, Effective hospitability, Job

satisfaction.
1. Introduction
Personality has been perceived differently by different scholars. The term personality is
derived from the Latin word persona meaning a mask. Personality is a patterned body of
habits, traits, attitudes and ideas of an individual as these are organized externally into roles
and statuses and as they relate internally to motivation, goals and various aspects of selfhood.
For example, Robbins and Judge (2005) have stated that personality refers to the sum total
of ways in which an individual reacts and interacts with others. Similarly, Luthans (2011)
has claimed personality as a means how a person affects others and how he understands and
views himself as well as the pattern of inner and outer measurable traits and person-situation
1 Kapil Khanal, PhD is associate professor at Shanker Dev Campus, Kathmandu

15
interaction. According to Robert and Burgess, personality is the sum and organization of
those traits which determine the role of an individual in group/s.
The present researcher observed from the works of different scholars in this respect so
as to confirm the relevance of taking up an idea whether considering varying leadership
styles across the different managers working in the field of hospitality in the present
Nepalese context. In this discourse, the present researcher could not be confirmed if there
was significant difference of the styles opted by the different managers as the past studies
provided with mixed findings in this respect. For example, Keer, Bogaert and Trbovic (2009)
have concluded that there exists a very narrow difference of the personality traits opted
by the male and female executives whereby the female managers were found to be more
conscious on people related matters.
In contrary, Kadyrkulova (2008) has identified that the gender of the respective managers
was not a strong determinant of their managerial approaches and the male and female lead-
managers were differently superior in different aspects of their leadership traits.
The relationships of the Big Five personality traits to turnover intention are another area of
research interest; studies on the topic however have focused on one or two traits, and their
results have been incongruous (Timmerman, 2006; Zimmerman, 2008). Whereas positive
traits such as extraversion and openness to experience were related to turnover among call
center employees (Timmerman, 2006), other positive traits such as emotional stability best
predicted negatively employees’ intentions to quit, and conscientiousness and agreeableness
best predicted negatively actual turnover decisions (Zimmerman, 2008). There seems to be
a need for a research to clarify the role of the Big Five personality traits as a set to predict
turnover intention.
The above discussions are enough to come to a conclusion that there is still a big room to
explore whether the gender of the lead-managers is an instrumental element to determine the
personality type indicators of their managerial approaches and also it is equally undecided
whether the personality type of these managers is dependent on their gender. In this respect,
the present researcher decided to conduct a systematic observation to confirm the role of
gender difference in the process of determining leadership styles possessed by the lead-
managers serving in the fore-front of the hospitality institutions in Nepal, specifically
in the five-star hotels located in the Kathmandu Valley. As a result, a study entitled "
An Assessment of Personality-Type of Managers in Nepalese Hotel Industries" was
visualized to address the concern.
1.2. Statement of the problem

The preliminary exploration during the stage of problem formulation for this research
revealed that most of the five-star hotels in Kathmandu were employing male candidates as
mid-level and top-level managers. Similarly, the ongoing practice of equality and unbiased
gender culture in the hotel industry was found to be lacking in contrary to evolving global

practices. Thus, the present researcher was quite concerned to know if the gender of respective
manager was really important while raising the professionals in responsible positions in
the hospitality industry. As a result, the present researcher devised a single statement of
problem that reads as – Can the personality type of the key people leading five-star hotels be
measured in respect with their gender?
In other words, the present study was concerned with examining the roles of female
managers on the lead as compared to that of male managers. Similarly, this study aimed to
assess the gender-wise display of managerial personality traits and compare them with the
vested personality type indicators. On the other hand, the study was focused on the trend of
placement and status of female managers working in the five-star hotels.
1.3. Objective of the study

The main objective of this research was to evaluate the performance variance of the top
managers of the five-star hotels of Nepal in respect with their gender. More specifically, this
study further aimed-
• To compare the personality traits of top level male and female managers working in the
five-star hotels of Nepal,
• To identify the perceived dominant personality traits across the genders of the managers
taken into reference of study
• To establish relationship among various personality traits.
The main aim of performing review of literature was to get acquainted with the concept of
personality and specifically personality traits of the managers serving in the leading 5-star
hotels of Nepal. This chapter has been guided by the purpose of getting depth knowledge of
personality type indicators in lead-managers of the hotels.
All individuals who have a bachelor degree may guess the first lecture's topic. If the lecture is
on philosophy, the first question would be "what is philosophy?" In other words, psychology
professors traditionally start their lectures with the following question: What is personality?
(Burger, 2006, p.22). Personality may be defined as emotional, interpersonal, experiential and
motivational forms that explain behaviors in different situations. It points to psychological traits
which are constant in time and which provides reasons for the behaviors of the individual, and
these traits constitute a unified combination that shows who the person is while determining
his/her emotional, behavioral and cognitive forms (Mount et al., 2005, p. 447).
“Personality” comes from the Latin term “persona.” In antique Greece and Rome, actors
had masks called “persona” which emphasized the traits they represent on the stage. Later,
this term has been used to mean both the person and his/her role in society (Luthans, 1992,
p. 85). In many cases, five orthogonal characteristics result from measurement of many
people’s personality traits and factor analysis as a covariance structure and these are named

17
as extroversion, adaptability, self-control, neuroticism and openness towards experience.

Based on the studies which support the robustness and versatility of five-factor model,
categorization of five-factor model creates a pre organizational structure for important
personality traits, if not for all (Cook, 2005, p. 2).
If we are to conclude from these definitions related to personality, it comes out as a unique
image of the factors affecting a person’s perception, thinking and behaving modes. Being
under the constant impact of stimulants coming from inside and outside, personality includes
all biological, psychological, hereditary and acquired abilities, motives, feelings, wants,
habits and all other behaviors of the individual. In sum, it is possible to see hereditary traits
and environmental impacts in the constitution of personality. One may conclude from this
that if environment's impact is taken into account, personality reflects to some extent traits
common to the community, and to some extent traits common in all humans, and not only
traits unique to individual (Yelboga, 2006, p. 198).
As is shown by personality researchers, one of the definitions of personality traits is five-

factor model (McCrae and John, 1990, p. 176). Five-factor model in the explanation of
personality was first used in 1960s and gained speed later in 1980s and 1990s. By the late
1980s, personality scientists came to a common agreement on five strong factors of "Five-
Factor Model" which provided a meaningful and useful categorization for the organization
of complex findings in personality literature (Taggar et al., 1999, p. 901). Due to the frequent
emergence of five-factor model of personality in studies conducted according to various
methods, these factors are called as “Big Five” in the literature (Burger, 2006, p. 251). In
general, “five-factor model” is used as a common term (Carver and Scheier, 2004, p. 66).
Many scholars have laid emphasis on numerous components which are considered as the
determinant to examine the personality traits. For example, Myers-Briggs (Digman, 1990,
as cited in Luthans, 2011) termed four dimensions as the basis of personality traits which
include – 1. Social interaction: extrovert or introvert (E or I), 2. Preference for gathering
data: sensing or intuitive (S or N), 3. Preference for decision making: feeling or thinking (F
or T), and 4. Style of making decisions: perceptive or judgmental (P or J).
Again, Costa and McCrae (1992, as cited in Robbins, & Judge, 2014) have emphasized on five
factor model to assess the personality traits of an individual in any setting. These factors include
extraversion, neuroticism, agreeableness, conscientiousness and openness to experience.
The concept and definition of any management term is quiet vague. Meaning, an exact and
universally accepted definition of discipline like personality is a challenging task. Moreover,
different scholars opt it in their own way and perspectives. For example, Mikulincer and
Shaver (2015) stated that ‘personality refers to individual differences in characteristic
patterns of thinking, feeling and behaving.’ Similarly, “Personality” derived from the Latin
term “Persona” which means (1) a mask worn by theater actors to represent their role and
personality in the play; (2) the authentic self, which includes one’s intrinsic motivations,
emotions, habits, and ideas (Chan, 1996).
Ellis (2008) stated that, personality falls under the heading of things that most people believe

they understand. In fact, there is probably no domain within any field of knowledge in which
more people think they have achieved some expertise. Simply put, most people believe they
can know or understand other people. We all try to predict behavior, interpret conversations,
and make inferences about others’ actions. If someone offends us, acts strangely, or seems
excessively kind, we will quickly try to understand their motives. In addition, we often
draw inferences about what kind of people they are; that is, what personality traits they may
possess. Most of us regard ourselves as competent judges of personality. We make use of our
skills in personality assessment on a daily basis; however, most of us would have a difficult
time explaining exactly how we draw our conclusions about others.
The Big Five personality traits (Goldberg, 1992; John & Srivastava, 1999), or the Five-Factor
personality traits (McCrae & Costa, 1987) is a widely researched model of personality that
consists of five dimensions: neuroticism (or conversely emotional stability), extraversion,
openness to experience, conscientiousness, and agreeableness. Emotional stability
refers to the capability of an individual to respond well to stress; extraversion represents
outgoingness and sociability; openness to experience is the degree to which one is open-
minded; consciousness represents the extent to which one performs tasks accurately and
thoroughly; and agreeableness refers to one’s cooperativeness and consideration (Kyllonen,
Walters, & Kaufman, 2005).
Researchers have attempted to establish the validity of the Big Five personality traits in
predicting employee behaviors. Thus, agreeableness predicted hotel employees’ job burnout
(Kim, Shin, & Umbreit, 2007), and extroversion was negatively associated, and neuroticism
was positively associated with emotional exhaustion among hotel managers (O'Neill & Xiao,
2010). Studies of the relationships of the Big Five personality traits to employees’ turnover
intention have produced incongruous results; whereas positive traits such as extraversion
and openness to experience were related to turnover intention (Timmerman, 2006), positive
traits such as emotional stability, conscientiousness and agreeableness were negatively
predictive of turnover intention, and actual turnover (Zimmerman, 2008). We therefore seek
to clarify the relationships of the Big Five personality traits as a set to turnover intention.
We believe that studying the Big Five personality traits as a set would enhance its validity
in predicting turnover intention. The Big Five personality traits as a set had a multiple
correlation of .41 with job satisfaction (Judge, Heller, & Mount, 2002), and .49 with the
motivational criteria (Judge & Ilies, 2002). The effect sizes of the full set of Big Five
personality traits was multiple R = .36 on entrepreneurial intentions, and multiple R = .31 on
entrepreneurial performance (H. Zhao, Seibert, & Lumpkin, 2010). Also, a test among hotel
employees would support the utility of the Big Five personality traits as a set in hospitality
work and suggest their use in the selection of hotel employees. Results of our study would
support the Big Five theory hypothesis of the effects of personality traits on self-concept
(hospitality competency) and characteristics adaptations (turnover intention). As the Big
Five personality traits are related to positive work behavior, we expect them to negatively
relate to negative behavior such as turnover intention, and hypothesized that:

19
Hypothesis 1: Thai hotel staff’s Big Five personality traits as a set would negatively predict
their turnover intention.
Job satisfaction also mediates to reduce negative job behaviors such as counterproductive
work behavior and turnover intention. Thus, job satisfaction partially mediated the relationship
of agreeableness to organizational and interpersonal counterproductive work behaviors
(Mount, Ilies, & Johnson, 2006). Job satisfaction mediated the relationship of organizational
identification to turnover intention (Van Dick et al., 2004), of leader-member exchange to
turnover intention (Han & Jekel, 2011), and of polychronicity to turnover intention (Jang &
George, 2012). There is strong evidence that job satisfaction is dispositionally based (Judge
& Larsen, 2001), and the Big Five personality traits as a set have a multiple correlation of .41
with job satisfaction (Judge et al., 2002). There has yet to be a study on the mediating effect
of job satisfaction on the relationship of Big Five personality traits to turnover intention, and
support for the role of job satisfaction in this relationship would point to its importance in
reducing turnover and organizational costs. We believe that job satisfaction would mediate
to reduce turnover intention, and therefore hypothesized that:
Hypothesis 3: Job satisfaction would mediate the relationship of the Big Five personality
traits to turnover intention.
Intention to leave an organization is a topic of interest to practitioners and researchers

(Babakus, Yavas, & Karatepe, 2008; Hemdi & Nasurdin, 2006, 2008; Lv, Xu, & Ji, 2012).
Emotional exhaustion was related to turnover intention among hotel employees in Turkey
(Babakus et al., 2008) and China (Lv et al., 2012). Perceptions of distributive justice were
significantly related to turnover intention (Hemdi & Nasurdin, 2008), whereas trust in
the organization tended to reduce turnover intention (Hemdi & Nasurdin, 2006). A meta-
analysis involving 155 studies found that turnover intention mediated nearly all relationships
of attitudes to turnover (Tett & Meyer, 1993). As intention to leave an organization is more
predictive of employee turnover than overall job satisfaction or organizational commitment
(Steel & Ovalle, 1984), we used turnover intention in our study as a predictor of actual
turnover.
Further, this scholar has claimed that, everyday conceptions of personality traits make
two key assumptions. First, traits are stable over time. Most people would accept that an
individual’s behavior naturally varies somewhat from occasion to occasion, but would
maintain also that there is a core of consistency which defines the individual’s ‘true nature’:
unchangeable spots of the leopard. In other words, there are differences between individuals
that are apparent across a variety of situations. We might expect several different contexts
such as examinations, social occasions and group discussions. Stability distinguishes traits
from more transient properties of the person, such as temporary mood states. Second, it is
generally believed that traits directly influence behavior. If a person spontaneously breaks
into cheerful song, we might ‘explain’ the behavior by saying that he or she has a happy
disposition. Such lay explanations are, of course, on shaky ground because of the circularity.

There are amply variables which are used to describe personality. Many of these words
have rather similar meanings: precise, careful, meticulous and painstaking would all seem to
relate to some common quality of conscientiousness. Such overlapping traits can be grouped
together as a broad aspect or dimension of personality. The present research in basic is
concerned to a question as: what is the number of such broad dimensions that are needed to
describe the main elements of any individual personality. Numerous research efforts have
been devoted to drawing up classificatory schemes of fundamental personality dimensions:
estimates of the number required range from three to thirty and so on.
2.1. Conceptual framework

By pursuing the above theoretical framework, the present researcher has developed an
explicit conceptual framework to conduct the study. This conceptual framework is the basis
on which the study is constructed:
Figure 1: Conceptual framework for the study
Professionalism
Emotional stability
Personality
Extraversion
Openness Male Female
Altruism
Conscientiousness
As presented in above figure, the research work holds an assumption that the comparison
between the personality traits of male and female managers of 5 star hotels of Nepal is based
on independent variables like: Professionalism, Emotional stability, Extraversion, Openness,
Altruism, and Conscientiousness. This means, the personality traits of either male or female
is differentiated with reference to these mentioned variables. Furthermore, the variation in
these variables is the main source to observe and measure the differences in the personality
attributes and managerial competencies of genders.
3. Methodology Used
3.1. Research design
Descriptive and explanatory research designs were applied to meet the objectives of the
present research through both quantitative and qualitative methodology as there are limited
numbers of 5-star category hotels to be observed and also that simple survey approach will
not be sufficient to meet the objective of the study.

21
3.2. Nature and source of data

In this study primary data were used. The data that were received from employees on
different level, line-managers and the information collected from internet, magazines,
booklets, journals, newspapers and publications were considered as primary data.
3.3. Population and sampling technique

The population of this study comprises the 5-star hotels of Nepal. There are twelve 5-star
hotels operating in Nepal at the end of July, 2020. As a sample, 80 of each mid-level staffs
(including possible & equal participation of both the genders) from four 5-star hotels were
selected on random sampling technique which will represent all the whole work-force of the
5-star hotels of Nepal. In total, 320 employees from four 5-star hotels were taken to conduct
the study.
3.4. Data collection techniques

Survey visit was conducted to four 5-star hotels in Kathmandu. A formal interview was
conducted with the respondents and information was collected through questionnaires. For
the reference different magazines, newspapers and internet sources was considered.
3.5. Data processing and analysis

After collecting all level of information they were processed in a systematic manner in
accordance with the objective of study. SPSS software is used for the collected data analysis
and interpretation.
3.6. Data presentation and analysis

3.6.1. Demographic profiles of respondents
This section has dealt with the profile of 320 respondents involved in this research study.
The study has concentrated on age and work experience as basic profile indicators of the
respondents.
Table 1: Demographic profiles of the respondents

Age Male Female Total
20 to 30 years 98 102 200
Above 30 years 60 60 120
Work experience
Up-to 5 years 60 (50.8%) 58 (48.2%) 118 (100%)
Above 5 years 98 (48.5%) 104 (51.5%) 202 (100%)

The present research comprises of 320 total respondents taken from four 5-star hotels
located in the Kathmandu Valley. Among total respondents, 158 are male and 162 are female
whereby, in the 20 to 30 year’s age group, 98 are male and 102 are female. 60 male and
60 female are interviewed of age group above 30 years. This fact reveals that the female
between 20 to 30 years of age are extensively employed in 5-star hotels of Nepal.
Work experience is also examined in course of conducting this research. Among which, 118
respondents had their work experience of up-to 5 years, including 60 i.e. 50.8% male and
58 i.e. 48.2% female. Likewise, among 202 respondents having work experience above 5
years, 98 i.e. 48.5% were male and 104 i.e. 51.5% were female. Similarly, the above figure
concludes that female with work experience above 5 years are dominant in the compared to
male employees.
3.6.2. Perception analysis of respondents

This section is basically based on the facts and figures computed to analyze the personality
traits and its type-indicator. Therefore, responses from the respective respondents are
presented in best possible methodology. Each major parameter for the personality type
indicators have been descriptively presented in this section.
Table 2: Composite Mean Scores of Personality Variables

Variables Male Female
Professionalism 4.31 4.24
Emotional stability 4.18 4.13
Extraversion 4.23 4.26
Openness 4.13 4.25
Altruism 4.16 4.15
Conscientiousness 4.16 4.18
Hence, the table 2 draws a conclusion that male managers are professional compared to
the female managers. Comparatively, male lead-managers seems to be competent than the
female lead-manages in terms of emotional stability. Similarly, female managers are seen
more ahead than male when it’s a concern of extraversion. In terms of openness also, female
seems to be dominant than male lead-mangers. The above total figure reveals that male
managers are a little more proficient than female lead- mangers while considering their
altruism character. While considering the conscientiousness among the male and female
managers, male are seen more conscientious compared to female.
3.6.3. Measurement of correlation among carious personality traits

For the purpose of identifying the relationship among various personality traits of the lead-
managers, the present researcher has explored the linkage of those traits. In such, the significant
interrelationship among personality traits of the lead-manager is interpreted below:

23
Table 3: Measurement of correlation among various personality traits
Emotional Stability
Conscientiousness
Personality Traits
Professionalism
Extraversion
Openness
Altruism
Professionalism 1 0.296** 0.197* 0.385** 0.290** 0.140
Emotional Stability 1 0.297** 0.312** 0.217** 0.186*
Extraversion 1 0.266** 0.438** 0.177*

Openness 1 0.351** 0.223**
Altruism 1 0.387**
Conscientiousness 1
**. Correlation is significant at the 0.01 level (2-tailed)
*. Correlation is significant at the 0.05 level (2-tailed)
In table 3, the relationships among the variables are analyzed as: Professionalism is
significantly related with emotional stability, openness and altruism under 1% level of
significance. Similarly, the relation between professionalism and extraversion is significant
under 5% level of significance. There is no significant relationship between professionalism
and conscientiousness.
Likewise, emotional stability is significantly related with extraversion, openness and
altruism under 1% level of significance, and relation that with conscientiousness is under
5% level of significance. In such, extraversion is related significantly with openness and
altruism under 1% level of significance whereas; extraversion is significantly related with
conscientiousness at 5% level of significance. Openness has significant relationship with
both altruism and conscientiousness under 1% level of significance. Lastly, altruism and
conscientiousness are observed to be significantly related under 1% level of significance.
4. Discussion
The concept of hospitality competency includes skills, abilities, and attitudes that enable
hospitality workers to successfully discharge their duties (Tesone & Ricci, 2005, 2006).
We operationally defined hospitality competency to include attitude, communication skills,
human relation skills, self-discipline and hospitality technical skills (Zopiatis, 2007),
and developed a scale to assess its mediating effect on the Big Five personality traits and
turnover intention relationship. Factor analysis of the hospitality competency data revealed a
five-factor structure corresponding to the hypothesized dimensions; the scale also exhibited
satisfactory reliability. Our results showed that the Big Five personality traits predicted
hospitality competency, indicating that hotel employees who scored high in the Big Five

traits were also competent in their hospitality tasks. The Big Five personality traits and
hospitality competency scales we developed may be used in tandem to select hospitality
employees.
Although hospitality competency was related to turnover intention it failed to predict

turnover intention when age, income, and education were entered as control variables. It
seems that turnover intention is also influenced by demographic factors, such that young,
highly paid, and well educated hotel employees are likely to have turnover intention. It is
also possible that hospitality competency belongs to the domain of job performance and a
study on the relationship of hospitality competency to job performance may yield a positive
result. More research is needed to establish the relationship of hospitality competency to job
performance.
Results of our study add to the literature on the role of job satisfaction as a mediator, and
increase our understanding of hotel employees’ turnover intention. Job satisfaction mediates
the relationship of the Big Five personality traits to turnover intention; the Big Five
personality traits as a set seem to increase the level of job satisfaction to negatively predict
turnover intention. The relationship of the Big Five personality traits to job satisfaction
relationship found in our study seems to support the suggestion that job satisfaction might be
dispositionally based (Judge & Larsen, 2001). The mediation effect of job satisfaction on the
relationship of the Big Five personality traits to turnover intention has important implication
for hotels; it may be beneficial for hotels to recruit employees who are high in the Big Five
personality traits as they tend to be satisfied with their jobs and are unlikely to quit.
5. Conclusions
There exists some differences in the personality traits of male and female lead-managers, but
they are small. Female employees between age-group 20 to 30 and having work experience
above 5 years are extensively employed in 5-star hotels of Nepal. Relation among various
personality traits is experienced significant under respective level of significance, except
relationship between professionalism and conscientiousness, which is observed to be
significantly different. Female generally tend to adopt democratic or participative style
while governing people, whereas, male induce an autocratic or directive style in their daily
performance. Female managers are more concerned towards people-related issues and
quality performance; while male managers seem to attach more importance to an effective
performance, control of emotions, concern towards others welfare and specific and careful
at works. Female lead-managers basically confront a double bind situation: If they act like
a leader, using typically male characteristics, they are perceived as being hard, because they
act against the typical female personality profile. If they act like a female, they are perceived
as being inefficient, since typically male personality traits are perceived as more effective
in terms of performance. Male managers seem to be competent in characteristics like:
concerned, careful, helpful, socially confident, organized and meticulous. Contrarily, female
are more proficient when it comes to teamwork, communicative and methodological works.

25
This research study is based on an exploratory and descriptive research design to meet the
objectives of the present research through qualitative and quantitative methodology. This
observation based methodology was applied due to less number of 5-star category hotels in
Kathmandu Valley, and in Nepal as a whole. Moreover, simply the survey approach would
not have been adequate to meet the objectives of the study.
This study concluded that the female managers were reported to confront a double-bind
situation in most of the cases where they were blamed to be acting with more harsh attitude
towards the people if they acted being practically strict. At the same time, they were again
blamed for being inefficient and motherly-loyal towards the employees if they acted with
liberal attitude. However the general observation towards the male managers remained more
biased in such respects, meaning that the male managers level of strictness, no matter how
soft or strict it be, received little concern of the fellow workers.

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29
COVID-19 The Global Pandemic: Learning &
Take Out for National Pension System (NPS)
Haladhara Sahu1
haladharasahudse@gmail.com
Ritu Sapra2
Abstract
The SARS Cov-2 (Covid 19) pandemic has shaken the whole world; it has brought the
business, education, industry, transport, communications, travel, hospitality almost all
the economic activities to a standstill. Accordingly, it has adversely affected the financial
markets and stock exchanges across the globe. The stock exchanges, may it be New York
Stock Exchange, Dow Jones, London Stock Exchange, Nikkei, Bombay Stock Exchange
or National Stock Exchange experienced an unprecedented plunge of 40 to 50% in a period
few weeks. This new dynamic of volatility possesses serious questions about the market
driven National Pension System (NPS) which endeavor to ensure smooth retirement life for
Indian elderly. The volatility in security market will significantly impact the fund managers’
performance and accordingly the retirement benefit of the subscriber. This article has
investigated the impacts of pandemic on fund manager’s risk returns profile. We have used
three industry standard risk-adjusted returns parameters such as Sharpe ratio, Treynor Ratio
and Jensen’s alpha to evaluate the performance of NPS pension fund managers selected under
study. The study has also explored the learning from such unexpected crisis for the policy
makers for future preparedness. On the basis of finding, it has suggested some measures for
long run sustainability of schemes under NPS.
Keywords : NPS, PFRDA, Defined benefit, Defined contribution, Pension fund managers,
Risk adjusted returns, COVID-19.
1. Introduction
1.1 Background
Investment guidelines of PFRDA (Pension Fund Regulatory & Development Authority of
India) permit the fund managers of National Pension System (NPS) to invest in different
categories of financial instruments like government bonds, corporate debts, money market
instruments, assets backed securities, equity and derivatives of companies listed in NSE
and/or BSE to ensure better market-based returns to the subscribers of NPS. Since 2016,
PFRDA’s investment approach has been shifting towards equity from government securities
and corporate debts. The new investment norms permit up to 75% investment in equity
1 Doctoral Fellow at Department of Commerce, Delhi School of Economics. University of Delhi. Assistant
Professor (HoD), Department of Commerce. Kalahandi University, Bhawanipatna.
2 Associate Professor, Department of Commerce, Delhi School of Economics. University of Delhi.

COVID-19 The Global Pandemic: Learning & Take Out for National Pension System (NPS)
and equity related financial instruments. Investments in equity carry higher component risk
that is the downward deviation from the expectation which could reduce the benefit to the
subscriber substantially.
The prime objective of retirement saving is to ensure income security at old age when all
other sources of income stop. Putting such huge corpus under equity ambit seems like putting
the very notion of retirement security at risk. We have somehow established the notion that
in the long run equity investment is going to provide higher positive returns compared to
other investment avenues. However, the recent experience in stock market particularly after
the spread of Corona Virus Disease (COVID-19) (SARS-CoV-2: Severe Acute Respiratory
Syndrome Coronavirus 2), equity markets in India witnessed an unprecedented fall, it dips
around 40% in a month. The nationwide lockdown put all the business houses, factories,
industries, transport and communication to a standstill. The COVID-19 is one instance
of such incidence, there could be many more unforeseen future possibilities of war, bio-
chemical attack, external aggression, economic crisis or any other unforeseen event which
could bring surprising turn of event in a security market. As a consequence, the return
may dip down well below the contribution. What will happen to the retirement saving of
people who are approaching retirement during such dive without any contribution protection
insurance? Contribution made under NPS is public retirement saving entrusted with the hope
of decent retirement life in future and the decent retirement life of elderly is conditional upon
the performance of NPS’s fund managers. Are we ready to put our retirement saving to such
high volatility without any protection mechanism?
In this article we have tried to study the impacts of such volatility on retirement savings. We
have also tried to explore the protection, options and flexibility to be incorporated in NPS to
tackle such volatility and make it sustainable in the long-run.
1.2 Introducing the national pension system (NPS)

Pressure from academic community and international reforms evidenced in pension sector in
number of countries started to strengthen the argument for instituting an alternative pension
system in India. In 1998 Ministry of Social Justice and Empowerment, set up an inter-
ministerial expert committee, termed as the Project OASIS (Old Age Social and Income
Security) to devise a pension system for the country.
The Project OASIS Expert Committee submitted its report to the Ministry in January 2000,
the committee recommended, defined contributory pension, where the individual will open
an Individual Retirement Account (IRA) at early working stages of life and make some
periodical monetary contribution to IRA. The contributed sum in the IRA would be managed
by professional pension fund managers through investment in the security market. Pension
benefit under the scheme would depend upon the accumulated balance in the account of
subscribers at the time of retirement. Better the investment return and performance of fund
managers better would be the retirement benefit and vice versa. Retirement benefit would be
provided in form annuities by annuity service provider companies.

31
The committee recommended the defined contribution is the only option for pension
assurance, given the financial health of the economy it is not possible to continue the exiting
defined benefit pension scheme. It also recommended for a strong independent pension
sector regulator to control and regulate the industry and intermediaries. OASIS committee’s
main focus was to include the excluded unorganized sector workers in the new pension
system; even if their saving is modest but the long-term saving could give a decent retirement
security, if the saving being properly managed. (OASIS Committee Report, 1999)
OASIS recommendation also suggested a contribution protection insurance, when the final
value at retirement falls short to the subscriber accumulated contribution made in the past,
the government will ensure the difference between the contribution and final value by
purchasing insurance from insurance companies. Now it has been more than one and half
decade since the reforms of pension sector there is no mention of contribution protection
insurance in any of the pension scheme.
Pressure on the fiscal front, increasing pension pay-outs obligated the government to change
the pension system for government employees from defined benefit to a defined contribution
system. In the year 2003, Government of India established Pension Fund Regulatory and
Development Authority (PFRDA) as an interim regulator and assigned the duty of reforms,
promotion, regulation and development of pension architecture of the country. In 2004,
PFRDA introduced New Pension Scheme (NPS), which replaced the existing defined
benefit pension model with the defined contribution pension model for government sector
employee. Later in 2009, NPS was extended to private sector all citizen and renamed as
National Pension System.
Under the defined benefit pension scheme employee is entitled to a fixed sum of pension
benefit after retirement(Normally 50% of last drawn salary indexed to DA). On the other
hand, under the new defined contribution scheme, the subscriber has to contribute a specific
sum of money from monthly salary or income for future income security. The periodical
specific sum of money so contributed would be managed by the professional Fund Managers
appointed by the PFRDA and the retirement benefit of the subscriber would depend upon the
returns generated by the fund managers through investment in security markets.
Investment norms of NPS permit the fund managers (registered with PFRDA) to invest in
different class of financial assets like government bonds, corporate debts, money market
instruments, assets backed securities, equity of companies and derivatives of companies
registered under NSE (National Stock Exchange) or/and BSE (Bombay Stock Exchange) to
ensure better market returns to the subscriber registered under NPS.
Contribution in the hand fund managers is public retirement saving entrusted with the hope
of decent retirement life in future. It is essential to note that, decent retirement life of elderly
is conditional upon the performance of NPS fund managers. And performance of fund
manager is subject to market returns. Therefore, it is also essential to evaluate the portfolio
risk-returns, investment norms, investment practices, performance and regulation of pension
fund managers, to check whether the national pension system is in right direction to deliver
retirement income security to the elderly or otherwise.

In this article we have tried to assess intent and reality. The intent of PFRDA is to ensure a
smooth retirement life through market-based returns to the subscribers. Does the intent and
reality in the same direction? Are the NPS fund managers generating market-based return
for subscriber of NPS without putting retirement saving at substantial risk? Or is it a case of
otherwise?
CG Scheme and SG Scheme: CG scheme is for Central Government employees and SG

scheme for State Government Employees, who have joined the service after 1ST January
2004. In both CG and SG scheme the employer and employee contribute 10% of employee’s
salary. The amount so contributed is invested by the fund managers selected by the regulator
(PFRDA). Presently there are three fund managers namely 1. SBI Pension Fund Private
Limited, 2. UTI Retirement Solution Limited, and 3. LIC Pension Fund limited to manage
the contribution of government sector employees. In CG&SG Scheme employee neither
have the choice of fund manager nor have the option of assets allocation.
Benefit under the CG&SG scheme depends upon the investment returns of the fund
managers over the years. The employee would get the benefit at the time of retirement in
form of lumpsum withdrawal of 60% accumulated corpus in the retirement account and the
subscriber has to purchase an annuity worth minimum of 40% of corpus, from the insurance
companies registered under the PFRDA. The annuity service provider would give monthly
pension to the retiree according to the purchase price and terms of annuity chosen.
Private Sector (All Citizen): All Citizen is a defined contribution, covers all the subscribers
enrolled under NPS through their corporate employer, individual registration or professional
subscribers from unorganized sector. All citizen subscribers have both the option to choose
the fund managers of their own and also have the option to choose the class of securities and
portion of contribution to be invested in those securities from the three classes of securities
such as Government Securities, Corporate debts and equity. Investment exposure is capped at
100% for government securities, 100% for corporate debts and 75% for equity of companies.
There are two investment options in the all-citizen scheme first one is Active Choice second
one is Auto Choice Life cycle funds. In active choice the subscriber would decide what
would be the percentage investment in three different classes of securities such as G-Sec,
Corporate Debts and Equity, subject to maximum ceiling of investment of 75% in equity. If
a subscriber does not make active choice, then his contribution would be invested according
to the life cycle fund (auto choice). Under life cycle fund the subscriber investment and
risk exposure would be decided on the basis of his age, in the early stage of working more
money would be in invested in Equity and Corporate debts and less would be invested in
government securities and as the subscriber grow older, investment exposure to equity and
corporate debt would be gradually reduced by fund managers.
In All Citizen Scheme, there might be co-contribution from employer otherwise sole
contribution from the employee or subscriber who is self-employed. This is also a defined
contribution scheme; the contribution amount is managed by both public and private sector

33
fund managers. At present there are 7 pension fund managers operating under NPS All
Citizen Scheme to manage the contribution. Following are the seven Pension Fund managers
1. SBI Pension Funds Pvt. Ltd., 2.UTI Retirement Solutions Ltd., 3. LIC Pension Fund
Ltd., 4. Kotak Mahindra Pension Fund Ltd., 5. Birla Sunlife Pension Management
Ltd., 6. ICICI Prudential Pension Funds Management Co. Ltd. and 7. HDFC Pension
Management Co. Ltd.
Benefit to the subscriber would be the accumulated money in PRAN (Permanent Retirement
Account Number) through investment returns generated by the fund managers. The
subscriber could withdraw maximum of 60% of accumulated corpus in the retirement
account, remaining 40% would be utilized to buy annuity from the insurance company who
would provide the monthly pension to the retiree.
There are two types of account namely Tier-1 and Tier-2 for both the government and private
sector employees. Tier-1 account which a compulsory retirement account and no withdrawal
could be made from this account before retirement (except limited 3 premature withdrawal
permitted with a gap of 5 years for each subsequent withdrawal for specified purpose). Tier-
2 account is optional, just like a saving account where deposit and withdrawal could be made
anytime. The benefit of tier-2 account is that contribution in this account is managed by NPS
fund managers at lower fund management fees.
Recently some of the committee appointed by the PFRDA are advocating for more active
equity leaning strategy for pension fund managers.
In 2014, PFRDA set up an expert committee under the chairmanship of former SEBI and
LIC chief G N Bajpai to review the investment norms for NPS schemes in the private sector.
The committee recommended additional scope and freedom for pension fund managers in
diversifying investment portfolio under NPS scheme.
Introduction of new assets classes like Covered notes, Commercial papers, Certificate of
Deposits, Repo, Reverse Repo, Collateralised Borrowing and Lending Obligations (CBLO),
derivatives for the purpose of hedging etc. The Committee also advocated for assets backed
securities, private equity and Venture capital funds. The committee expressed concern about
low risk -low return government sector assets class by NPS funds managers and suggested
reforms will orient fund managers towards equity and other non-government securities.
The committee proposed following guidelines for future course of action.
Providing scope for private sector pension funds to manage the funds of the government
sector employees. Equating the investment guidelines of the government and private sector
employees. Shifting the orientation of pension fund manager’s investment practice from
fixed low return government securities to high risk-high return equity investment.

Increasing the ceiling of Equity investment of government sector employees from 15% to
50%. Gradually improving the ceiling to 75%. Allowing the life cycle funds equity cap up
to 75%. The Committee also proposed active fund management strategy instead of passive
fund management strategy. Allowing for participation of pension fund managers in both
primary and secondary market equity investment. In addition, recommendations were made
to remove the investment limits in government securities. There should not be ceiling on
investment on any assets class and there may be a negative list of assets on the basis of past
experience. (G.N.Bajpai Committee Report, 2015)
Accordingly in 2015-16 PFRDA has allowed following exposure, in active choice for
corporate sector employees/subscribers. Exposure in Equity Assets Class (E) is raised up
to 75%, Corporate Bonds Asset Class (C) is up to 100%,Government Securities Asset Class
(G) is up to 100% and Alternate Asset Class (A) is up to 5% respectively.
For Government sector employee presently the exposure in Government Securities is up to

50%, exposure in Corporate Debt securities is up to 45%, exposure in Equity and Equity
related investment is up to 15%, exposure in Short Term Debt securities is up to 5%, and
exposure in Assets Backed, Trust Structured and Miscellaneous investment is up to 5%.
There is also talk of harmonization of investment pattern of corporate sector employees and
government sector employees and accordingly increasing the ceiling of equity exposure
of government sector employees from 15% to 50%. Gradually equity ceiling would be
increased to 75% in active choice.
In this article we have selected total of 4 fund managers, managing contributions of

government sector employees and private sector employees, professionals and self-
employed. We have analyzed their performance from different scheme of NPS by using
numbers of performance evaluation techniques.
2. Research Methodology
2.1 Descriptive statistics
Descriptive statistics quantitatively summarize the patterns and general trends of a data set
in a single representative value. It enables a reader to quickly understand and interpret vast
set of data by describing its main features. Following are some of the descriptive statistics
which have been used in study.
Mean return (annual average return): has been used to calculate average return of pension
fund managers.
Holding period return could be calculated by considering one day, week, month, quarter or
year as one period. For example, NAV per unit on 1/4/2008 is 10 rupees of SBI PF Managers
invested in Corporate Debt Tier-1 scheme, suppose the NAV per unit has grown to 11.23 on
31/3/2009 after one year then periodic return would be as follows

35
AR=((NAV at the end of Period - NAV at the begining of period)

AR = *100
/(NAV of previous day¬) )
(11.23-10)
= *100 = 12.3%
(10) )
Geometric mean (GM): is used to calculate the (CAGR) Compound Annual Growth Rate or
Compound Annual returns of fund managers.
The compound annual growth rate (CAGR) is the mean annual growth rate of an investment

over a specified period of time longer than one year. It is essentially a notional rate of returns
that describes the rate at which an investment would have grown if it had grown at a steady
rate, which virtually never happens in reality. We use CAGR as a way to smooth out an
investment’s returns so that they may be more easily understood.
For example, in the initial starting year, on 1/4/2008 TIER-1 Equity NAV of UTI retirement
solutions Pension Fund Managers was 10 rupee per unit, let suppose it has grown to 20 rupee
per unit as on 31/3/2015 then the CAGR would be as follows
(1/n)
Terminal NAV Valu)
CAGR/GM= -1 *100
Intial NAV Valu)
In this equation the ‘n’ is number of periods; in our example 1/4/2008 to 31/3/2015 is 7
periods considering the compounding happens annually.
(1/7
20
CAGR/GM= -1 *100 =10.40 %
10
or Growth rate would be 1.104

It means that the investment has grown at 10.4% annually had it been a single rate.
Measures of risk adjusted returns:

In order to evaluate the comparative performance of NPS fund managers, following
performance measures have been used in the study.
In some of the earlier research works of performance evaluation it was found that sometime
investors misguidedly assume that, the success of their portfolio depends on the returns
alone but very few consider that the risk they undertook to achieve those returns. In the
present day, we have three sets of popular performance measurement tools to assist the fund
managers and individual investors in the evaluation of portfolio. The Treynor, Sharpe and
Jensen ratios which combine risk and return performance into a single value, but they are
different from each other in some aspects. All these measures derive their basic principle
from the Capital Assets Pricing Model (CAPM). These measures are industry standard since

nineteen-sixties. I have found that these measures have been used in several literatures to
study the performance of institutional fund managers. (Treynor, 1965), (Sharpe, 1966),
(Jensen, 1968), (Panigrahi, 1996), (Sias & W., 1996), (P. A. Gompers, 2001) have used
these ratio to compare the performance of mutual funds with the benchmark and the
competitors.
Treynor measure
The present-day portfolio evaluation technique could be traced back to the Jack L. Treynor,
who introduced Reward to Volatility Ratio as performance measures for any fund managers’
performance ranking. Excess returns of the portfolio over the risk-free return is expressed in
relation to portfolio’s systematic risk is the Treynor ratio (TR). Higher the TR higher is the
relative performance of fund manager. (Treynor, 1965).
Treynor suggested, there were two components of risk: the risk produced by fluctuations
in the market and the risk arising from the volatility of individual securities. He advocates
the unsystematic risk that is the fluctuation arising out of volatility of individual security in
the portfolio could be minimized to nothing with proper diversification. While the Treynor
Measures only consider the systematic risk β as the risk measures which capture market risk
arising out of relative volatility between the portfolio and the market.
The Treynor measure, also known as the reward to volatility ratio, defined as:
TR= (Portfolio Return - Risk Free Rate)/ Beta
The numerator identifies the excess returns or risk premium and the denominator with
the risk of the portfolio. The resulting value represents the portfolio's return per unit risk.
The TR (Treynor Ratio) is a relative measure. Therefore, Treynor Ratio is used to evaluate
comparative performance of fund manager or with index benchmark performance, greater
the Treynor ratio higher the efficiency of fund manager.
To better understand how this works, suppose that the 10-year average annual return for the
S&P BSE 100 (market portfolio) is 10%, while the average annual return on Government of
India 364 days Treasury bills (a good proxy for the risk-free rate) let say 5%. Then assume
we are evaluating three distinct pension funds port-folio managers, with the following 10-
year results:
Managers Average Annual Return Beta (β) TR

PENSION FUND A 9% 0.90 (9-5)/0.90 = 4.44
PENSION FUND B 15% 1.02 (15-5)/1.02 = 9.80
PENSION FUND C 16% 1.25 (16-5)/1.25 = 8.80
TR for (market) = (10-5)/1 = 5
The higher the Treynor measure, the better the portfolio. If you had been evaluating the
portfolio manager (or port-folio) on returns alone, you may have inadvertently identified
pension fund manager C as having yielded the highest results. However, when considering

37
the risks that each manager took to attain their respective returns, pension fund manager B
demonstrated the better outcome. In this example, pension fund managers B and C have
outperformed the market index with the higher Treynor value, pension fund managers A is
the underperformer among three with lowest Treynor ratio/value.
CovJ,m covariance of portfolio returns and market returns
Calculation of Beta, β = =
Varm market variance
In our study for the purpose of calculation Beta, (β), by observing the assets allocation and
portfolio disclosure of pension fund managers following market indices have been selected
for Beta, (β) calculation.
SCHEMES ASSETS CLASS INDICES

Equity Tier-1 Equity S&P Bse 100
Corporate Debt Tier-1 Corporate Debt S&P Bse India Corporate Bond
Index
Govt. Securities Tier-1 Government Securities S&P Bse India Government
Bond Index
For Risk free Rate we have considered 364 days RBI T-bills rate in 2019-20 that is 5.16%.
Treynor measure considers the systematic risk only, it assumes that the fund managers have
already has adequately diversified the portfolio and, therefore, unsystematic risk is not
considered. As a result, this performance measure should only be used by investors who
hold diversified portfolios. (Treynor, 1965)
Sharpe ratio
Later in (Sharpe, 1966) came up with little variation to the Treynor majors. In order to avoid
the problem of risk calculation under Treynor measures, the Sharpe measures considered
both systematic and unsystematic risk in calculating risk. The Sharpe ratio just like Treynor
ratio the only difference was the denominator in the equation, Treynor has used portfolio
beta (βp) as risk of portfolio whereas Sharpe has used Portfolio standard (σp) deviation
(which includes both systematic and unsystematic risk) as a risk measure.
In his study Willium Sharpe attempted to predict future performance of fund managers by
applying this Sharpe ratio. He collected the data of actual returns and calculated standard
deviation of 34 fund managers for last 20 years and divided the period into 10 years each.
Thereafter he calculated Sharpe ratio differently for each 10-years period for all those fund
managers. In the study he found that, the fund managers whose Sharpe ratio was higher in
the first 10 years, it was also high in the last 10 years period for most of the fund managers.
To check the validity of his finding, he also used Treynor ratio and found the same result.
Sharpe conclusion was fund managers performed better in the past would more likely to
perform better in future. Sharpe himself believes that no methods and model could predict
the future performance perfectly.

The Sharpe ratio is similar to the Treynor measure, but there is a difference in the denominator
of the Sharpe ratio which consider portfolio standard deviation as measures of risk which
combine both systematic risk and unsystematic risk whereas Treynor measures only consider
systematic or market risk β.
Sharpe Ratio= (Portfolio Return – Risk Free Rate)/ Standard Deviation
Assuming that the S&P BSE 100 had an average return of 10% and standard deviation of 15%
over a 10-year period, let's determine the Sharpe ratios for the following portfolio managers:
Average Annual Portfolio Standard

Manager Sharpe Ratio (SR)
Return Deviation (σ)
Pension Fund X 13% 12% (13-5)/12 = .66
Pension Fund Y 18% 19% (18-5)/19 = .68
Pension Fund Z 20% 34% (20-5)/34 = .44
Sharpe ratio for (market) = (10-5)/15 =.33
Once again, we find that the best portfolio is not necessarily the one with the highest return.
Instead, it's the one with the most superior risk-adjusted return, or in this case the fund
managed by pension fund manager Y had been efficient in the 10-year period. In the above
example of Sharpe ratio of all the pension fund managers have outperformed the benchmark
S&P BSE 100 index.
Likewise, Treynor ratio the Sharpe ratio is also a relative measure hence a single Sharpe
value has no interpretation.
Unlike the Treynor measure, the Sharpe ratio evaluates the portfolio manager on the basis
of both rate of return and diversification (as it considers total portfolio risk as measured by
standard deviation in its denominator). Therefore, the Sharpe ratio is more appropriate for
well diversified portfolios, because it more accurately considers the risks of the portfolio.
(Sharpe, 1966)
Jensen alpha
Like the previous performance measures discussed, the Jensen measure is also based on
CAPM. The Jensen measures calculates the excess return that a portfolio generates over
its expected return, it may give positive or negative value called Alpha. If the Alpha is
positive and higher than other, it indicates that the fund a manager has performed better and
a negative Alpha indicate bad performance. Unlike the Treynor Measure and Sharpe ratio,
Jensen Alpha is an absolute measure of performance.
The Jensen ratio measures how much of the portfolio's rate of return is attributable to the
manager's ability to deliver above-average returns, adjusted for market risk. The higher the
alpha, the better the risk-adjusted returns. A portfolio with a consistently positive excess
return will have a positive alpha, while a portfolio with a consistently negative excess return
will have a negative alpha. (Jensen, 1968)

39
Jensen’s Alpha= (Actual Portfolio Return – Expected Portfolio Return with given Beta)
E(r)= Risk Free Rate + Beta (Return of Market – Risk Free Rate of Return)
α =- Rp-Rf + βp (Rm - Rf)
Rp = Return of Portfolio, Rf = Beta of Portfolio, βp = Risk-free Rate, and Rm = Market Return

So, if we once again assume a risk-free rate of T-bills 5% and a market return of 10%,
calculating Alpha in the following table
Average
Manager Annual Beta(β) ER of PF Alpha
Return
Pension Fund D 11% 0.90 5 + 0.90 (10-5) = 9.5% 11%- 9.5% = 1.5%
Pension Fund E 16% 1.14 5 + 1.14 (10-5) = 10.7% 16%- 10.7% = 5.3%
Pension Fund F 18% 1.26 5 + 1.26 (10-5) = 11.3% 18%- 11.3% = 6.7%
First, we calculate the portfolio's expected return then we calculate the portfolio's alpha by
subtracting the expected return of the portfolio from the actual return.
Pension Fund managers F did better instead of high beta, because it has provided better
return given the higher market risk of portfolio.
Portfolio performance measures should be a key aspect of the investment decision process.
These tools provide the necessary information for investors to assess how effectively their
money has been invested (or may be invested). Remember, portfolio returns are only part of
the story, without evaluating risk-adjusted returns, an investor cannot possibly see the whole
investment picture, which may inadvertently lead to clouded investment decisions.
2.2 Sources of data

For the purpose of study, we have collected secondary data from following sources:
Historical NAV data and Port-folio information have been collected from respective pension
fund manager’s website.
Indices Value and Historical figures were collected from BSE and NSE websites.
Scheme and investment norms, fund managers information have been collected from
PFRDA Website, Annual Reports, Master circular and Monthly bulletin of PFRDA.
Period of study is from 1st April 2008 to 31st March 2020 (twelve years). Though NPS was
roll out in 2004 actual investment started taking place since 2008.
For the purpose of this study the following four fund managers have been selected on the
basis of their long periods of operation as pension fund managers under NPS architecture.
The following four fund managers have been managing NPS corpus since the inception of
investment.

Two (PFs) for government sectors employees. (Government Sector Pension Fund Managers)
1. SBI Pension Funds Pvt. Ltd.
2. UTI Retirement Solutions Ltd.
Four (PFs) for private sectors employees and self-employed. (Private Sector Pension Fund
Managers)
3. ICICI Prudential Pension Funds Management Co. Ltd.
4. Kotak Mahindra Pension Funds Ltd.
Risk, returns & performance Of fund managers

The following tables & diagrams are self-compilation and calculation of author from the
historical NAV data of fund managers and historical indices value.

SBI FUND MANAGERS RETURNS UNDER DIFFERENT SCHEME OF NPS
CORP.DEBT- GOV.SEC
SCHEMES CG SCHEME SG SCHEME EQUITY TIER-1
TIER-1 TIER-1
CAGR (%)
CAGR (%)
CAGR(%)
CAGR(%)
CAGR(%)
ANNUAL
AR(%)
AR(%)
AR(%)
AR(%)
AR(%)
RETURN
2008-09 9.5 9.5
2009-10 13.04 16.7 6.33 6.33 7.95 7.95 9.94 9.94 10.02 10.02
2010-11 11.35 8.12 8.09 9.92 8 8.1 11.29 12.7 11.13 12.27
2011-12 9.94 5.89 7.67 6.86 2.73 -7.01 11.22 11.14 9.22 5.49
2012-13 10.5 12.76 8.98 13.03 4.08 8.27 11.97 14.27 10.27 13.54
2013-14 9.37 3.92 7.92 3.85 7.23 20.88 10.58 5.18 8.18 0.26
2014-15 10.74 19.38 9.81 19.79 10.48 28.33 11.41 15.74 10.17 20.74
2015-16 10.19 6.5 9.35 6.66 7.77 -7.14 11.03 8.73 9.74 7.17
2016-17 10.52 13.17 9.83 13.29 9.43 21.84 11.14 11.96 10.07 12.46
2017-18 10.06 6.1 9.39 5.96 9.53 10.36 10.6 6.4 9.52 5.22
2018-19 9.96 8.98 9.33 8.84 9.88 13.1 10.34 8.06 9.47 9.04
2019-20 9.82 8.33 9.27 8.63 6.13 -25.01 10.42 11.19 9.94 14.86

41
All the schemes seem to have stable Annual Returns except Equity Scheme, volatility in
equity return could be visualized in the diagram. One striking observation in the table as
well as in the diagram, that CAGR of Equity Tier -1 as on 31st March 2020 is 6.13%.
CAGR SBI PF has Come down to 6.13% because of negative 25.1% returns in financial
year 2019-20. This reduced CAGR indicate substantial variation in pension benefit between
two subscribers provided significant portion is invested in equity. One who is retiring during
March 2020 will get much less benefit compare to one who is retiring during March 2019.
The fall in CAGR in March 2020 in Equity Scheme was because of nationwide lockdown to
curb the spread of Covid-19. In the past one-decade equity scheme has generated negative
returns across the fund managers for three financial years (2011-12,2015-16, and 2019-20).

UTI RETIREMENT SOLUTIONS RETURNS UNDER DIFFERENT SCHEME OF NPS
CORP.DEBT- GOV.SEC
CG SCHEME SG SCHEME EQUITY TIER-1
SCHEMES TIER-1 TIER-1
CAGR (%)
CAGR (%)
CAGR(%)
CAGR(%)
CAGR(%)
AR(%)
AR(%)
AR(%)
AR(%)
AR(%)
ANNUAL
RETURN
2008-09 11.53 11.53
2009-10 11.06 10.63 5.93 5.93 25.93 25.93 4.01 4.01 1.97 1.97
2010-11 10.14 8.38 8.51 11.19 16.29 7.42 6.56 9.18 7.04 12.45
2011-12 9.02 5.75 7.76 6.34 7.46 -8.19 7.77 10.3 5.93 3.84
2012-13 9.65 12.3 9.1 13.25 7.45 7.43 9.15 13.46 7.79 13.64
2013-14 8.87 5.06 8.2 4.73 9.97 20.66 8.53 6.15 6.38 0.93
2014-15 10.2 18.57 9.89 18.79 13.04 29.76 9.59 15.07 8.56 20.21
2015-16 9.7 6.25 9.37 6.34 9.98 -6.68 9.48 8.83 8.36 7.17
2016-17 10.13 13.65 9.89 13.59 11.15 22.95 9.8 12.04 8.76 11.68
2017-18 9.73 6.26 9.45 6.07 11.48 11.12 9.36 5.95 8.25 4.26
2018-19 9.63 8.61 9.36 8.59 11.57 12.37 9.12 6.99 8.28 8.6
2019-20 9.43 7.24 9.18 7.37 7.29 -27.44 9.28 10.87 8.82 14.42

Similar observation could be made for the returns of UTI retirement solutions. In the
financial year 2019-2020 all the fund managers have provided negative returns in equity
scheme in the range of 25 to 30%. Equity CAGR is in the similar range of 6 to 7% ,lagging
behind current wholesale price index.
Equity, Corporate debt and G-Sec scheme have similar CAGR in previous years, however
the volatility in equity returns is considerably high.
Performance of the private fund managers, ICICI Prudential Pension Funds Management
Co. Ltd. and Kotak Mahindra Pension Funds Ltd is also similar to the public sector fund
managers that could be witnessed from similar diagrams depicting all the schemes. Returns
of Corporate Debt and G-Sec schemes are subject to interest rate and credit default risk.
Returns from the Corporate Debt and G-Sec schemes are inversely related to market interest
rate. Rise in interest rate could reduce the value of such debt securities and vice versa. In
2013-14 RBI raised repo rates to 8 percentage points, accordingly market interest rates were
high, as a consequence all the fund managers have reported returns less than 2% in G-Sec
scheme, G-Sec returns of SBI was as low as 0.26% in 2013-14. Accordingly in 2020 RBI
reduced policy repo rate to 4% to ease businesses, which resulted in lower interest rate in the
market as a result all the fund managers have reported around 15% return in G-sec Schemes.
Corporate debt seems to have relatively lesser impact of interest rate change compare to
G-sec. Corporate debt has provided relatively stable returns in comparison to other schemes
in past 12 years with less volatility.

43
3. ICICI Prudential Pension Funds Management Co. Ltd.

RETURNS OF ICICI PRUDENTIAL PENSION FUND
SCHEMES EQUITY TIER-1 CORP.DEBT-TIER-1 GOV.SEC TIER-1
CAGR(%)
CAGR(%)
CAGR(%)
ANNUAL
AR(%)
AR(%)
AR(%)
RETURN
2009-10 22.49 22.49 10.03 10.03 4.5 4.5

2010-11 17.04 11.91 9.72 9.44 6.09 7.71
2011-12 8.11 -7.68 10.29 11.52 6.08 6.12
2012-13 8.34 9.11 11.25 14.26 7.97 13.92
2013-14 10.8 21.19 10.23 6.24 6.64 1.52
2014-15 13.59 28.65 11.12 15.76 8.88 20.82
2015-16 10.33 -7.34 10.93 9.8 8.6 6.97
2016-17 11.66 21.43 11.12 12.51 9.04 12.18
2017-18 11.46 9.97 10.59 6.42 8.59 5.11
2018-19 11.58 12.59 10.35 8.28 8.61 8.8
2019-20 7.44 -26.3 10.31 9.91 9.18 15.05
All the schemes operating under NPS across fund managers have delivered a CAGR of 9 to
11% in the past 12 years of operations. All the fund managers seem to have similar range of
Annual returns and CAGR across the schemes. Close inspection reveals that, fund managers
are investing in almost similar portfolio with minor variation. Moreover, they have same
investment guidelines from the pension fund regulator (PFRDA).

4. Kotak Mahindra Pension Funds Ltd.

RETURNS OF KOTAK MAHINDRA PENSION FUND
CAGR(%)
CAGR(%)
CAGR(%)
ANNUAL RETURN
AR(%)
AR(%)
AR(%)
2009-10 14.20 14.20 10.00 10.00 3.50 3.50
2010-11 13.05 11.91 10.41 10.82 6.25 9.08
2011-12 4.68 -10.25 10.36 10.25 6.24 6.20
2012-13 6.35 11.51 11.49 14.96 8.03 13.59
2013-14 8.88 19.62 10.33 5.83 6.54 0.80
2014-15 11.90 28.30 11.11 15.11 8.62 19.60
2015-16 9.00 -6.88 10.88 9.46 8.46 7.55
2016-17 10.57 22.21 11.06 12.38 8.98 12.63
2017-18 10.64 11.19 10.54 6.48 8.50 4.73
2018-19 10.61 10.31 10.16 6.73 8.55 9.07
2019-20 6.76 -25.07 10.15 10.03 9.14 15.18
Like all other pension fund managers, we could observe volatility in equity schemes and
stable returns for Corporate debt scheme in the Kotak Mahindra PF. It is also visible in the
diagram that G sec scheme returns are relatively more volatile compare to corporate debts
and relatively less volatile compare to equity scheme across fund managers.
The following tables contains the CAGR, average returns, standard deviation, coefficient of
variation, Sharpe Ratio (S.R), Treynor Ratio (T.R) and Jensen’s Alpha (J.A) of four pension
fund managers for different schemes under NPS.

45
The following tables are author’s self-calculation and compilation, from the NAV data of
fund managers and Indexes. The following tables are based on data up to 31 March 2020.
SBI PENSION FUND PVT LIMITED

CG SG EQUITY CORP.DEBT- GOV.SEC
SCHEME
SCHEME SCHEME TIER-1 TIER-1 TIER-1
CAGR 9.82 9.27 6.13 10.42 9.94
AM 9.95 9.38 7.24 10.48 10.10
SD 4.47 4.30 14.59 3.08 5.31
C.V 44.91 45.86 201.39 29.34 52.54
S.R 1.07 0.98 0.14 1.73 0.93
T.R 2.16 4.21 3.17
J.A -6.02 -0.02 -1.39
ICICI PRUDENTIAL PF LTD

CAGR 7.44 10.31 9.18
AM 8.73 10.38 9.34
SD 15.62 2.84 5.35
C.V 178.95 27.35 57.30
S.R 0.23 1.84 0.78
TR 3.60 4.62 2.77
JA -4.75 0.45 -1.94
UTI RETIREMENT SOLUTIONS

CG SG EQUITY CORP.DEBT- GOV.SEC
SCHEME SCHEME SCHEME TIER-1 TIER-1 TIER-1
CAGR 9.43 9.18 7.29 9.28 8.82
AM 9.52 9.29 8.67 9.35 9.02
SD 3.82 4.18 16.34 3.25 5.74
C.V 40.08 44.98 188.55 34.77 63.70
S.R 1.14 0.99 0.21 1.29 0.67
T.R 3.45 3.52 2.48
J.A -5.04 -0.85 -2.46
KOTAK MAHINDRA PENSION FUND

SCHEMES EQUIRTY TIER-1 CORP. DEBT TIER-1 GOV SEC. TIER-1
CAGR 6.76 10.15 9.14
AM 7.91 10.19 9.27
SD 15.74 3.12 5.57
C.V 198.96 30.64 60.06
S.R 0.17 1.61 0.74
TR 2.81 3.99 2.78
JA -5.48 -0.30 -1.89

Given above calculations and analysis we came to the following finding and implications
that, in the past 12 years CAGR returns from Equity Scheme were 6.13% for SBI Pension
Funds, 7.2% for UTI Retirement Solutions,7.44 % for ICICI Prudential Pension Funds and
6.76% for Kotak Mahindra Pension Funds respectively, which are just above the RBI’s
inflation targeting upper range of 6%. And the average annual periodic returns of these four
fund managers for Equity scheme were 7.24%, 8.67%, 8. 73 %, 7.91% along with coefficient
of variation of 201.39%, 188.55%, 178.95% ,198.96 % respectively. These coefficients of
variation indicate a very high degree of volatility for the given level of returns generated
under equity scheme, across the fund managers. All the risk adjusted measures also indicate
the underperformance of equity scheme. Sharpe Ratio for the Equity Scheme is the lowest
in comparison to all other scheme of NPS across all fund managers selected for the study,
which implicates equity portfolio are not generating the justified desired return for the given
amount risk undertaken.
Here someone may argue that, it is quite immature to generalize the underperformance of
equity scheme because of an unprecedented dip in the stock market in a given year. An event
like COVID-19, nationwide lockdown, ban on export import which brings business to a
standstill could very well bring the stock market to a sudden plunge. However, one counter
argument to this could be, the return under equity scheme before the Covid-19, was not so
impressive given the risk undertaken under equity scheme. Both the Corporate Debt and
G-Sec schemes were generating similar range of 9% to 11% CAGR and Average Annual
Returns with considerably less volatility. In the past one decade of experience in equity
investment, we have seen in three different years, equity investment has generated negative
returns. In spite of better positive return in many years average returns is not so high for
equity because of the negative returns in some years are dragging the average down.
One may further argue that, are we protected from such kind risk in future? There may be
many unforeseen events in future which may bring surprising turns of events and dive in
the stock market, accordingly in the equity scheme. Event like Covid-19 lays foundation
for another layer of protection of old age income security like contribution insurance. If
the invested money falls short to the contribution, then what is the sense of investment
for retirement protection. The COVID-19 crisis revealed one more thing that, the equity
investment could plunge up to 25% to 40% in a span 10 to 15 days. From the above diagram
it is visible that, from April 2019 to March 2020 the Equity scheme has generated a negative
return of 25% to 28% with sufficient diversification by fund managers. All the major indices
like NSE Nifty 50, S&P BSE SENSEX, NSE Nifty 100, S&P BSE 100 took a dive of almost
40% in March 2020. Alternatively, it means someone’s retirement saving could very well
reduce by 25 % to 40% in a given month. If I put it in a more simplified terms, someone’s
retirement account had a 2 crore rupees balance in equity segment two week ago which has
become 1.2 crore two weeks after and he/ she could do nothing about it. Over reliance on
equity could reduce the retirement benefit significantly.
Almost all the risk adjusted measures are indicating the performance of Corporate Debt is
better than Government Securities and Equity Scheme.

47
One who is a firm believers of Equity investment will argue that, short term volatility is a
persistent features of equity investment, equity investment gives better returns in the long
run. Hence, one should not be worried about short term volatility. Then, my argument would
be, what if someone is retiring in the month March of 2020 and he is an active choice investor
with 75% allocation in Equity scheme. His retirement saving will reduce remarkably. And
we do not decide our retirement date.
The CG & SG schemes applicable for government employees have also delivered relatively
better return in comparison to exclusive investment in equity for the same fund managers
with less volatility. The CG& SG schemes have less than 15% fund allocation to equity
instruments.
We also know corporate debts and G-sec are not the safest investment they are also subject
to credit and interest rate risk. However, in the past these securities seem to have generated
moderate returns with less volatility.
3. Concluding Remarks
The fall of CAGR in March 2020 in Equity Scheme was because of nationwide lockdown
to curb the spread of Covid-19. There could be many more surprising turns of event may
it be war, bio chemical attack, banking crisis, financial crisis, financial scams or any other
unprecedented adverse event which could bring very high volatility in the short run. Which
could reduce the benefit to the subscriber retiring in the same period of crisis. Could we
avoid such kind of plunge in security market altogether? The answer is, no? What could be
possible solution?
Firstly, excessive reliance on equity investment and generous equity investment guidelines
needs to be reconsidered. Equity has the potential to reduce the benefit of the subscriber
significantly as witnessed in March 2020. The CAGR of equity was around 6 to 7% in
12 years which is similar to the inflation rate in the economy. From the above analysis
we have observed that equity is generating the CAGR in the similar range like corporate
debts, in some cases less than CAGR of Corporate debt scheme. However, volatility is quite
higher for the equity scheme as depicted by coefficient of variations for the given levels of
returns generated. Equity investment ceiling needs to be brought down to around 30 to 35%,
otherwise the concept of retirement security would be at risk. This 30 to 35% is a substantial
allocation in one assets class, this portion of investment could give a desired push to the
returns of subscriber. The return may not be significantly high but it will secure the purpose
retirement security.
Another solution, the policy maker could make the exit window flexible. The subscribers
shall have the flexibility of 10 years of exit window from NPS system, i.e., from 55 to 65
years. So that impact of short-term volatility could be minimized. The subscriber will exercise
his exit option when the retirement corpus and market returns suit him. For example, on 31
March 2020, equity scheme has negative 30% annual returns, if the subscriber is retiring in

the same month and making the withdrawal in the same period, his/her benefit would be very
low. If this flexibility of exit window be there, he/she may postpone or prepone his exit from
NPS considering the optimum benefit for self. Subscriber will choose a time period when the
benefits and corpus seem to be favorable, and accordingly apply for exit from NPS.
Third option could be protection through insurance purchase, but it will be expensive. In
period of crisis or pandemic honoring insurance contract is also quite questionable and
contingent.
All the schemes have generated CAGR in the range of 9 to 11%, why to put much emphasis
on equity by inviting additional risk component. Thirteen year of experience in equity scheme
under NPS architecture has indicated one thing, for similar range of returns the Corporate
Debts and Government Securities have undertaken relatively lesser risk. Even average
returns and CAGR of Corporate Debts and G-Sec are stable and higher in some years. In
our study we have seen that, the equity scheme is not generating substantially higher returns
for the substantially higher risk undertaken. Inviting additional risk to generate lower or
similar range of average returns or CAGR does not brings lot of financial sense. Excessive
dependence on equity has the potential to reduce the benefits to the subscriber substantially
too. Are we ready to put our retirement saving to such risk or shall we settle for moderate
returns? The policy makers need to reconsider the intention of aggressive expansion in the
ceiling of equity investment, when there is no layer of protection for downward deviation
under NPS architecture. Moreover, short term crisis or volatility are persistent to Equity
Market which seems to have lots of impact on equity scheme.
Limitations: Study could include a greater number of fund managers. Study could be
undertaken for tier-2 schemes of NPS.

49
References
OASIS Committee Report. (1999). Old Age Social and Income Security. Ministry of Social Justice and
Empowerment .
G.N. Bajpai Committee Report. (2015). INVESTMENT GUIDELINES FOR NATIONAL PENSION
SYSTEM (NPS) SCHEMES IN PRIVATE SECTOR. PFRDA.
Treynor, J. (1965). How to rate management of investment funds’, Harvard Business Review. Harvard
Business Review, 43, 63-75.
Sharpe, W. (1966, January). Performance of Mutual Funds. The Journal of Business, 39, 119-138.
Jensen, M. (1968). The Performance of Mutual Funds in the period 1945-1964. Journal of Finance,
23(2).
Panigrahi, M. S. (1996). Mutual Funds: Growth, Performance and Prospects. Economic and Political
Weekly, 31(12).
Sias, & W., R. (1996). Volatility and the Institutional Investor. Financial Analysts Journal, 52(2), 13-
20.
P. A. Gompers, A. M. (2001). Institutional Investors and Equity Prices. The Quarterly Journal of
Economics, 216-259.
Bombay Stock Exchange. (2020, may 25). BSE India. Retrieved from https://www.bseindia.com:
https://www.bseindia.com/sensex/IndicesWatch_Weight.aspx?iname=BSE100&index_Code=22
ASIA INDEX Pvt. Ltd. (2020, May 6). Retrieved from https://www.asiaindex.co.in: https://www.
asiaindex.co.in/indices/fixed-income/sp-bse-india-corporate-bond-index
ASIA INDEX Pvt. Ltd. (2020, June 7). Retrieved from www.asiaindex.co.in: https://www.asiaindex.
co.in/indices/fixed-income/sp-bse-india-government-bond-index
Pension Fund Rgulatory and Development Authority. (n.d.). Retrieved from https://www.pfrda.org.in
ICICI PRUDENTIAL PENSION FUND LTD. (2020, JULY 1, 5, 6). Retrieved from www.
iciciprupensionfund.com/: https://www.iciciprupensionfund.com/NPS/#/public-disclosure/nav-
history
SBI PENSION FUND Pvt. Ltd. (2020, August 2,4,6,7,8). Retrieved from https://www.sbipensionfunds.
com: https://www.sbipensionfunds.com/historical-nav/
UTI Retirement Solutions . (2020, August 1,2,3,4,6). UTI Mutual Fund. Retrieved from www.utimf.
com: https://www.utimf.com/retirement-solutions/historical-nav/

The Impact of Capital and Deposit on
Financial Performance of Commercial
Banks in Nepal
Dhundi Raj Bhattarai, Ph. D.1
(dhundibhattarai@gmail.com)
Abstract
Purpose of this study is to measure characteristics of core capital ratio, bank capital, deposit,
net profit after tax, and earnings per share and their separate relationship and measure the
individual impact of core capital ratio, bank capital, and deposit on financial performance
i.e., net profit after tax (NPAT) and earnings per share (EPS). Descriptive, correlational,
and casual comparative research design has been used in this study. This study analyzed
secondary data of twenty-six commercial banks from fiscal year 2012/13 to 2018/19 out of
twenty-seven. Descriptive statistics, correlation analysis, and regression analysis statistical
tools were used in this study. According to its findings, earnings per share is highly dispersed
in comparison to net profit after tax as well as core capital ratio than bank capital. There is
high degree of positive relationship in between net profit after tax and deposit. Low degree
of positive relation in NPAT and core capital ratio and moderate degree of positive relation in
NPAT and Bank capital. Low degree of positive relation of EPS with deposit and low degree
of inverse relation of EPS with core capital. Core capital ratio, bank capital, and deposit
positive effects for increasing NPAT. Out of its, deposit highly effect. Deposit positive effects
for increase on EPS. High contribution of deposit and core capital to increase net profit. The
results of this study have relevance and probable generalizability about the impact of capital
adequacy ratio and deposit to increase financial performance of commercial banks in Nepal.
Keywords: NPAT, EPS, Capital, Deposit, Commercial banks
1. Introduction
Bank deposits consist of money placed into the Bank by its customers. These deposits are
made to deposit accounts such as fixed deposit accounts, savings accounts, margin deposit
accounts, call deposit accounts and current accounts. Deposits and borrowings (debt
securities issued) are the source of funds of the bank in addition to its reserves.
European Banks with higher deposits and loans ratio tend to be more profitable but the
effects on profitability are statistically insignificant in some cases (Menicucci & Paolucci,
2016). Deposits and borrowings (including debts securities issued) are initially measured
at fair value minus incremental direct transaction cost and subsequently measured at their
1 Lecturer, Nepal Commerce Campus, T. U.

9851126796

51
The Impact of Capital and Deposit on Financial Performance of Commercial Banks in Nepal
amortized cost using the effective interest method, except where the Bank designates
liabilities at fair value through profit or loss. a significant and negative correlation between
the liquidity creation and performance of Islamic banks, using return on average equity
measure (Sahyouni & Wang, 2019). Need for improving capital adequacy and reducing the
ratio of non-interest assets as a way to improve profitability (Husain & Abdullah, 2008).
Tier-1 Capital has a negative effect to profitability in Indonesian Commercial Banks (Sari,
Suhadak, Rahayu, & Solimun). The capital adequacy ratio (CAR) is a measurement of a
bank's available capital expressed as a percentage of a bank's risk-weighted credit exposures.
The capital adequacy ratio, also known as capital-to-risk weighted assets ratio (CRAR),
is used to protect depositors and promote the stability and efficiency of financial systems
around the world. Two types of capital are measured: tier-1 capital, which can absorb losses
without a bank being required to cease trading, and tier-2 capital, which can absorb losses
in the event of a winding-up and so provides a lesser degree of protection to depositors. The
study also revealed that GDP per capita, market capitalization and banks size have no impact
on profitability (Ahamad, 2019). perhaps
For two decades, the capital adequacy ratio (CAR) requirement has been one of the primary
regulatory mechanisms used to monitor banks. Presently, most regulators around the world
follow the Basel Accord, under which CARs are calculated by dividing a firm’s regulatory
capital (Tier 1, Tier 2, and Tier 3) by the firm’s risk-weighted assets (RWAs). However,
many banking practitioners and researchers have argued that CARs now have less relevance
due to the change from the historical-cost-based accounting regime to the fair-value-based
system (Anagnostopoulos and Buckland, 2005). Credit deposit ratio (CRDR) reduced the
profitability of private banks and public banks in India (Bansal, Singh, Kumar, & Gupta,
2018). Specifically, under the former system, balance sheet items were based on the book
values of assets and liabilities, while under the latter regime a great portion of financial assets
and liabilities (and hence, the regulatory capital) are determined on a marked-to-market
basis. As a result, the introduction of fair-value reporting may cause increased “unnecessary”
volatility of earnings and thus lead to the decreased relevance of CARs (Chisnall, 2000;
Allen and Carletti, 2008; Heaton et al., 2010).
Return on assets, the loans to deposit ratio, the logarithm of personnel, and the logarithm
of income of per capita, all have a positive and statistically significant impact on overall
efficiency change (Gaganis, Liadaki, Doumpos & Zopounidis (2009). Application of fair-
value accounting in the Taiwan banking industry is fairly similar to that of international or
US GAAP, and using Taiwan data also offers empirical advantages (as mentioned in the
previous paragraph), these results also yield insights into other standard-setters (Liao, 2013).
Second, a clear policy implication is related to the urgent need to seek feasible measures
for mitigating possible negative effects (Liao, 2013). More specifically, since as-if cost-
based CARs convey superior information at least under some circumstances, requiring
the explicit disclosure of cost-based CARs may aid users in assessing banks’ insolvency
risks. Additionally, users should evaluate banks’ disclosure quality before basing economic
decisions on fair-value-based CARs. Regulators and standard-setters should make more

effort to enhance the reporting quality if a full, fair-value application is still the eventual
goal for the near future (Liao, 2013).
Capital regulation is an effective tool in enhancing the stability and the profitability of the
financial services sector. In addition, the paper finds a positive relationship between regulatory
pressure in terms of restrictions on deposits and non-bank financial institutions profitability
(Ofoeda, Gariba, & Amoah, 2016). Risk management is crucial to the banking industry.
Since the Basel Accord was introduced, the minimum CAR requirement has become a major
regulatory tool in various jurisdictions. By definition, a CAR is the ratio of a bank’s total
regulatory capital divided by the total amount of RWAs. Regulatory capital consists of three
types of capital – Tier 1, Tier 2, and Tier 3 – while RWAs refer to a bank’s assets weighted
according to credit, interest, and operational risk. Previous studies on CARs mainly center
on the influence of the capital requirement on the riskiness of banks. For instance, Shrieves
and Dahl (1992) shows that, for banks that were undercapitalized according to regulatory
standards, the minimum capital regulation was at least partially effective in forcing banks to
increase their capital or to decrease risks. Profitability is positively affected by banks’ cost-
effectiveness, asset quality and level of capitalization in Islamic bank (Zarrouk, Jedidia, &
Moualhi, 2016).
Konishi and Yasudab (2004) finds that implementing the capital adequacy requirement reduced
risk taking in Japanese commercial banks; the authors also found that a bank’s capital was
negatively related to risk taking. Recently, in 2009 in the aftermath of the financial crisis, the
Basel Committee on Banking Supervision (BCBS) proposed major revisions and additions
to the existing Basel II capital adequacy regime. The resultant proposed framework is termed
“Basel III,” and the G20 endorsed the new Basel III capital and liquidity requirements at the
November 2010 Summit in Seoul. In detail, several important amendments were endorsed.
First, banks are required to hold 4.5 percent of common equity (up from 2 percent in Basel
II) and 6 percent of Tier 1 capital (up from 4 percent in Basel II) as RWAs, while Tier 3
capital will be phased out completely. Second, Basel III introduces additional capital buffers:
a mandatory capital conservation buffer of 2.5 percent; and a discretionary counter cyclical
buffer, which allows national regulators to require up to another 2.5 percent of capital during
periods of high credit growth.
The liquidity coverage ratio requires a bank to hold sufficient high-quality liquid assets
to cover its total net cash outflows over 30 days; the net stable funding ratio requires the
available amount of stable funding to exceed the required amount of stable funding over
a one-year period of extended stress. Overall, the new requirements under Basel III seek
to improve the quality of the capital, increase risk weightings for derivatives and repos,
introduce a leverage ratio, and address pro-cyclicality. Therefore, Basel III is expected to
have a major impact on the financial institutions, such as: weaker banks being crowded out;
significant pressure on banks’ profitability; changes in demand from short-term to long-term
funding; reduced risk of a systematic banking crisis; and a decrease in lending capacity
(Shearman and Sterling, 2011; KPMG, 2012). Capital regulations are complementary and
significantly impact on European bank performance (Ayadi, Ayadi, & Trabelsi, 2019).

53
Financial performance of commercial banks is strongly affected by capital adequacy ratio,

management efficiency, gross domestic product, liquidity management and assets quality
(Gautam, 2018).
Based on above international studies comparative study of impact of core capital, bank
capital, and deposit on financial performance is still remaining. So, this is the research gap
of the study.
Based on this research gap, following research question has been developed.
1. What is the average value and disperse value of different study variables: like net
profit after tax, earning per share, core capital ratio i.e. Common Equity (Tier 1 to Risk
Weighted Exposure Ratio), bank capital, and deposit as well as their relationship?
2. What is the impact of core capital ratio, bank capital, and deposit on financial
performance?
This study provides contributions in two ways. First one is impact of core capital, bank
capital, and deposit on financial performance and second one is which highly effect on
financial performance.
Recent theory on capital structure is based on the Modigliani and Miller’s (1958) influential
work on the effect of capital structure on the value of the firm. Their theory assumes perfect
markets and perfect competition in which firms operate without taxes or transaction cost and
where all relevant information is available without cost. However, these assumptions do not
hold in the real world or in practice and factors such as taxes, agency cost, cost of financial
distress and information asymmetry are important in explaining the capital structure of firms.
Hutchinson (1995) approved that in more general terms, financial leverage positive effect
on the firm’s return on equity provided that earnings’ power of the firm's assets (the ratio of
earnings before interest and taxes is divided by total assets) exceeds the average interest cost
of debt to the firm. He justified that the extent to which a firm’s earnings’ power is likely
to remain above the breakeven point and the potential speed or flexibility with which it can
adjust its debt usage, if its earnings’ power falls below average interest costs, should help to
determine the level of debt that the firm is willing to commit itself to at a given point in time.
Profitability of bank-specific, industry-specific and macroeconomic determinants of South

Eastern European credit institutions is examined by Athanasoglou, Brissmis, and Delis,
(2006). The empirical study has approved that bank size, credit risk and capitalization have
influenced on profitability. Regarding of macroeconomic variables, the results are mixed
among different countries.

2.1 Conceptual framework

Based on above study gap, following conceptual frame work has been developed.
EPS Bank Capital
CR
NPAT Deposit
Dependent Independent
Varibales Varibales
3. Methodology
Financial performance was measured through net profit after tax (NFAT) and earning per
share (EPS). Secondary sources of data were used in this study. This study occupied twenty-
six commercial banks out of twenty-seven. Rastriya Banijya Bank was excluded in this
study due to lack of annual audit report. Data were collected through annual audit report
of respective bank from fiscal year 2012/13 to 2018/19. So, total number of observations
were 182. Data were collected from annual audit report of concern bank. Mean, Range,
standard deviation, and coefficient of variation statistical tools were used in this study to
know individual characteristics of mention variables. So, this study used descriptive research
design. Correlation analysis statistical tool was used to understand relationship between
different mention variables. Multiple regression analysis statistical tools were used to
measure the impact of core capital ratio, bank capital, and deposit on financial performance.
So, this study also used correlational and casual comparative research design .
Following regression models were used in this study.
NPATi,t = α0+ β1CRi,t + β2BCi,t + β3DPTi,t εi,t……(i)

EPSi,t = α0+ β1CRi,t + β2BCi,t + β3DPTi,t εi,t……(i)
Dependent variable is net profit after (NPAT) tax of a firm i in a year t in regression (i) and
earning per share (EPS) of a firm i in a year t in regression (ii). Independent variables are
core capital ratio (CR) i.e. Common Equity (Tier 1 to Risk Weighted Exposure Ratio, bank
capital (BC), and deposit (DPT) of a firm i in a year t in both regression model.

55
4. Data Presentation, analysis and results

4.1. Descriptive statistics
Table 1: Descriptive Statistics
Variables N Maximum Minimum Mean Std. dev. C.V.
NPAT 182 4238853581.00 -804628575.00 1302411467.05 922797094.69 70.85296145
EPS 182 198.53 -40.23 27.39 19.98 72.94633078
CC 182 21.41 -0.59 11.65 2.68 23.00429185
BC 182 140232067893.00 4398193.00 9483593013.17 11220737437.96 118.32
Deposit 182 180575000000.00 1126000447.00 62606143480.52 33819479106.72 54.02
Table one has presented that coefficient of variation of earning per share is greater than net
profit after tax. Bank capital is highly dispersed than core capital ratio i.e. Common Equity
(Tier 1 to Risk Weighted Exposure Ratio). Deposit highly dispersed than core capital ratio
and less dispersed than bank capital.
4.2. Correlation Analysis

Table 2: Correlation Analysis
Variables NPAT EPS CC BC Deposit
NPAT 1.000
EPS 0.424** 1.0000
CC 0.235** -0.229** 1.000
BC 0.61** 0.119 0.37** 1.000
Deposit 0.86 ** 0.27** 0.028 0.516** 1.000
**. Correlation is significant at the 0.01 level (2-tailed)

*. Correlation is significant at the 0.05 level (2-tailed)
Table two has presented: Pearson correlation analysis has approved that there is moderate
degree of positive relationship in between net profit after tax and bank capital at 1 % LOS.
High degree of positive relationship between net profit after tax and deposit at 1 % LOS.
Similarly, low degree of positive relationship at 1 % LOS in between net profit after tax and
earning per share as well as net profit after tax and core capital ratio. There is low degree of
inverse relationship between earning per share and core capital ratio but low degree of direct
relationship in between earning per share and deposit at 1 % LOS. Low degree of positive
relationship in between core capital ratio and bank capital ratio at 1 % LOS and moderate
degree of positive relationship in between bank capital and deposit at 1 % LOS.

4.3 Regression analysis

Table 3: Dependent variable is Net Profit After Tax
Models Model 1 Model 2 Model 3
Variables Std. VIF T value Std. T val. VIF Std. T val. VIF
Corff. Corff. Corff.
Constants -6.524 -2.081 -4.755
CCi,t 0.211* 1.001 6.061 0.157* 4.237 1.208
BCi,t 0.227* 5.516 1.363 0.151* 3.496 1.645
Depositi 0.854* 1.001 24.521 0.742* 18.004 1.363 0.777* 19.306 1.422
R 2 = 0.783 R 2 = 0.777 R 2 = 0.797
F = 323.481* F = 311.416* F = 233.251*
D.W. = 2.072 D.W. = 2.156 D.W. = 2.075
Note: Number of Observations = 182 * Significant at 0.01 levels
** Significant at 0.05 levels *** Significant at 0.10 levels
Table three has showed: all regression models are statistically significant at 1 % LOS. Value
of variation inflation factor (VIF) of each independent variable of three regression models
is less than 10 approved that all regression models are free from multicollinearity problem.
Value of D.W. at 182 no. of observations approved that all regression models are free from
autocorrelation problem. Similarly, all regression models are free from heteroscedasticity
problem. More than 78 % area has explained each regression model. Coefficient value of
independent variable of each regression model is positive and statistically significant at 1 %
LOS. In regression model 1, coefficient value of Deposit 0.854 indicates that, when Deposit
variable will be increased by one unit under the condition of other thing will remain the same
on an average net profit after tax will be increased by 0.854 unit. Out of three independent
variables base on analysis of three regression models Deposit highly positive effect, core
capital ratio medium positive effect, and bank capital low positive effect for increasing net
profit after tax.
Table 4: Dependent variable is Earning Per Share

Models Model 1 Model 2 Model 3
Variables Std. VIF T value Std. T val. VIF Std. T val. VIF
Corff. Corff. Corff.
Constants -0.237* 1.001 5.66 -0.028 5.721 1.363 -0.275* 5.663 1.208
CCi,t -3.401 0.285* 1.363 0.105 -3.587 1.645
BCi,t 0.277* 1.001 -0.328 0.224* 1.179 1.422
Depositi 3.973 3.39 2.696
R 2 = 0.129 R 2 = 0.074 R 2 = 0.136
F = 13.304* F = 7.122* F = 9.352*
D.W. = 1.717 D.W. = 1.69 D.W. = 1.72
Note: Number of Observations = 182 * Significant at 0.01 levels
** Significant at 0.05 levels *** Significant at 0.10 levels

57
Table four has presented that all regression models are statistically significant at 1 % LOS.
All regression models are free from multicollinearity, autocorrelation, and heteroscedasticity
problem. All models are statistically significant at 1% LOS. According to regression result,
deposit positive effect for increasing earnings per share but core capital negative effect on
earnings per share.
5. Discussion and Concluding Remarks

Dispersion rate of core capital ratio (Tier 1 to Risk Weighted Exposure Ratio) is minimum
than bank capital. Dispersion rate of deposit is greater than core capital ratio but less than
bank capital. Out of earnings per share and net profit after tax, earnings per share is more
fluctuated. Net profit after tax low degree of direct relation with earnings per share and core
capital, moderate degree direct relation with bank capital, and high degree direct relation
with deposit at 1 % LOS. There is low degree of direct relation between deposit and earning
per share but low degree of inverse relation of earning per share with core capital. Deposit
positive effects on financial performance of commercial banks in Nepal. this result is similar
with Menicucci and Paolucci, (2016) and disimilar with Sahyouni and Wang (2019). Core
capital ratio and bank capital ratio positive effect to increase net profit after tax. This result is
supported by Husain and Abdullah, (2008). Core capital ratio inverse impact on earnings per
share. This result is similar with (Sari, Suhadak, Rahayu, & Solimun). There is no significant
impact of bank capital on earnings per share.
This research findings supported on existing theory capital adequacy ratio and deposit effect
on financial performance on financial institution. This study has provided the knowledge of
commercial banks about impact of different capital as well as deposit. This study based on
seven fiscal years from fiscal years 2012/13 to 2018/19 of twenty-six commercial banks.
Number of observations are 182. No. of observation should be increased to measure the
impact of bank capital on earnings per share. Dimension of financial performance should
be increased i.e., to measure the impact of core capital ratio, bank capital, deposit on return
on assets, return on equity, net profit divided by total income, price earning ration etc.
Core capital ratio should be increased for decreasing risk and increase net profit margin.
Commercial banks of Nepal should be focused on deposit amount.

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Appendix
EPS (Rupees)
Bank Capital
Core Capital
Ratio (%)
(Rupees)
(Rupees)
(Rupees)
Name of Bank
Deposit
NPAT
Nepal Bank F/Y
2075/76 26.99 2,596,736,045 15.87 22,244,812,860 118,275,000,000
Limited
2074/75 39.98 3,215,681,985 10.29 11,039,740,000 99,831,000,000
2073/74 38.77 1,747,123,778 13.37 12,158,918,000 93,944,000,000
2072/73 44.59 2,882,978,165 9.01 7,439,635,000 89,410,000,000
2071/72 7.48 483,848,520 6.32 4,398,193 77,999,000,000
2070/71 18.08 716,958,108 3.92 3,593,123,000 69,338,000,000
2069/70 198.53 755,180,353 -0.59 143,625,000 62,984,000,000
Agriculture 2075/76 42.88 4,191,590,635 19.27 140,232,067,893 118,884,922,831
Development Bank
2074/75 36.91 3,653,519,099 19.28 25,269,454,724 104,178,959,617
Limited
2073/74 31.59 2,973,280,536 18.61 23,448,862,000 99,816,272,142
2072/73 52.79 2,464,683,088 15.19 20,213,274,000 87,387,154,947
2071/72 78.83 3,603,370,808 15.17 18,654,158,000 77,035,056,186
2070/71 35.19 1,520,806,289 12.49 17,881,568,000 65,898,412,646
2069/70 59.03 2,289,319,963 13.61 16,950,972,000 54,477,651,530
Bank of 2075/76 23.53 1,896,956,036 13.22 13,712,689,915 83,327,700,000
Kathmandu
2074/75 19.46 1,321,187,647 13.39 12,821,881,661 76,913,800,000
Limited
2073/74 20.69 1,336,244,335 11.50 10,276,150,559 72,922,300,000
2072/73 14.86 655,275,698 10.64 9,303,246,256 68,066,100,000
2071/72 15.78 334,569,082 9.43 5,178,563,510 59,769,000,000
2070/71 13.25 254,441,782 8.77 34,116,000,000
2069/70 36.64 617,000,000 13.22 13,712,689,915 27,701,000,000
Citizens Bank 2075/76 17.49 1,463,218,780 13.22 11,980,895,685 74,136,000,000
Limited
2074/75 15.37 1,234,103,897 13.39 10,138,933,475 61,481,000,000
2073/74 20.27 1,634,917,774 11.50 9,987,371,000 52,719,000,000
2072/73 35.25 1,091,766,423 10.64 6,006,846,000 47,394,000,000
2071/72 30.94 720,308,502 9.43 4,479,702,000 35,782,000,000
2070/71 23.7 498,092,716 8.77 3,466,695,000 27,963,455,000
2069/70 19.66 413,245,291 13.22 2,534,073,000 22,743,104,000

Civil Bank Limited 2075/76 8.84 707,412,423 16.30 9,738,252,951 41,993,301,316
2074/75 9.69 629,899,463 19.45 6,779,521,000 34,222,597,013
2073/74 29.68 1,538,961,490 17.85 6,777,688,834 31,564,023,000
2072/73 6.03 193,730,115 11.07 2,296,001,277 1,126,000,447
2071/72 7.46 230,020,316 12.79 3,493,398,000 1,357,080,745
2070/71 8.24 238,099,256 13.76 3,222,149,000 1,377,359,653
2069/70 7.57 121,325,647 13.97 2,162,752,000 1,415,251,837
Everest Bank 2075/76 38.05 3,054,122,062 12.38 16,955,638,000 130,177,400,000
Limited
2074/75 32.78 2,581,681,778 12.65 15,616,670,000 116,427,800,000
2073/74 32.48 2,006,247,780 12.72 13,063,702,000 95,094,400,000
2072/73 40.33 1,730,207,025 10.34 10,094,804 93,735,400,000
2071/72 38.04 1,574,352,443 10.44 8,457,023,000 83,093,700,000
2070/71 26.63 1,549,698,561 9.35 6,422,257,000 62,108,100,000
2069/70 26.45 1,471,117,291 9.31 1,137,920,000 57,720,400,000

61
EPS (Rupees)
Bank Capital
Core Capital
Ratio (%)
(Rupees)
(Rupees)
(Rupees)
Name of Bank
Deposit
NPAT
F/Y
Global IME Bank 2075/76 26.79 2,761,953,667 10.56 17,350,622,000 124,499,000,000
Limited
2074/75 23.64 2,101,363,149 10.32 106,510,000,000
2073/74 25.51 2,006,159,460 10.23 11,543,265,922 101,910,000,000
2072/73 19.33 1,382,223,998 11.01 9,381,257,819 74,683,000,000
2071/72 15.58 960,608,067 11.24 7,908,636,000 60,176,000,000
2070/71 19.57 974,037,010 10.94 6,805,535,114 52,292,000,000
2069/70 16.15 449,218,454 9.17 3,874,581,100 34,111,000,000
Himalayan Bank 2075/76 32.44 2,763,848,475 11.63 15,871,587,201 113,090,000,000
Limited
2074/75 23.11 1,875,610,467 11.40 14,349,498,457 99,743,000,000
2073/74 33.55 2,178,234,893 10.93 12,613,817,027 92,881,114,255
2072/73 43.03 1,935,907,634 10.93 9,815,198,969 87,335,785,849
2071/72 33.37 1,112,285,716 9.43 8,041,967,083 73,538,200,185
2070/71 33.1 959,107,241 9.48 7,155,579,476 64,674,848,295
2069/70 34.19 943,697,990 8.96 6,414,437,452 53,072,319,487
Kumari Bank 2075/76 14.81 1,230,378,260 10.89 11,432,900,000 84,403,000,000
Limited
2074/75 14.54 1,046,488,403 12.48 10,462,927,000 69,651,000,000
2073/74 13.29 793,142,994 13.55 52,037,000,000
2072/73 26.53 716,064,646 10.75 4,259,079,000 37,951,000,000
2071/72 16.24 394,788,376 9.89 3,525,690,000 33,422,000,000
2070/71 18.69 341,654,966 10.85 3,185,508,000 27,578,000,000
2069/70 18.17 291,448,365 11.24 2,850,138,000 25,319,000,000
Laxmi Bank 2075/76 17.82 1,590,074,275 11.01 12,269,000,000 84,403,000,000
Limited
2074/75 14.37 1,181,090,925 11.32 10,987,000,000 69,651,000,000
2073/74 21.77 1,006,624,170 12.43 9,986,117,000 52,037,000,000
2072/73 27.15 677,127,177 9.79 6,075,527,000 37,951,000,000
2071/72 19.42 416,195,924 9.17 4,634,659,000 33,422,000,000
2070/71 26.07 474,856,488 10.85 3,697,912,000 27,578,000,000
2069/70 24.78 419,842,579 11.24 3,262,640,000 25,319,000,000
Machhapuchchhre 2075/76 21.07 1,697,088,243 11.88 11,308,458,000 91,560,200,000.00
Bank Limited
2074/75 15.81 1,249,688,316 14.38 10,623,725,000 72,474,719,641
2073/74 24 1,302,483,429 15.78 9,091,177,000 58,629,076,680
2072/73 25.04 898,222,681 11.32 5,726,052,792 52,291,877,270
2071/72 22.2 616,372,739 11.14 4,351,914,904 44,205,637,252
2070/71 18.34 454,687,791 9.69 3,456,483,000 37,132,092,928
2069/70 5.98 148,599,200 11.59 2,923,876,000 27,136,654,448
Megha Bank 2075/76 15.69 1,629,689,787 14.34 13,598,590,000 81,859,000,000
Limited
2074/75 12.81 1,317,351,773 16.97 12,568,650,000 62,965,000,000
2073/74 17.31 793,006,074 13.8 6,195,945,544 38,937,000,000
2072/73 17 551,043,663 11.94 4,469,681,000 30,750,000,000
2071/72 13.27 346,296,108 13.98 3,254,691,000 21,131,000,000
2070/71 13.11 305,537,370 15.24 2,888,264,000 17,148,000,000
2069/70 7.61 177,355,953 17.24 2,566,849,000 12,533,000,000

EPS (Rupees)
Bank Capital
Core Capital
Ratio (%)
(Rupees)
(Rupees)
(Rupees)
Name of Bank
Deposit
NPAT
F/Y
Nabil Bank 2075/76 50.57 4,238,853,581 11.40 21,245,470,606 164,373,041,697
Limited
2074/75 49.51 3,981,892,950 11.51 18,710,876,440 135,979,364,610
2073/74 59.86 3,613,200,322 11.21 14,752,638,819 118,684,419,344
2072/73 59.27 2,819,333,752 10.51 12,203,615,000 110,210,927,524
2071/72 57.24 2,093,813,608 10.18 10,154,006,000 104,237,910,083
2070/71 83.68 2,319,557,472 9.68 8,302,904,000 75,388,790,862
2069/70 91.05 2,226,686,260 9.98 7,366,908,000 63,506,102,707
Nepal Bangladesh 2075/76 19.63 1,587,960,145 11.06 14,202,230,000.00 59,764,707,000
Bank Limited
2074/75 14.95 1,144,035,276 13.31 11,628,900,000 47,982,823,000
2073/74 28.05 1,200,381,901 14.39 10,715,863,000 43,713,193,739
2072/73 39.43 1,198,297,230 10.21 6,042,450,000 39,874,233,993
2071/72 33.48 813,976,568 10.6 4,848,885,000 33,832,696,025
2070/71 36.94 742,342,538 10.64 3,612,011,000 25,706,915,697
2069/70 38.75 778,645,431 10.76 2,664,288,000 17,845,158,014
Nepal Credit and 2075/76 15.77 1,021,232,240 13.38 11,887,310,000
Commerce Bank
2074/75 23.51 1,341,516,334 10.29 7,571,000,000 63,430,544,471
Limited
2073/74 14.02 505,867,992 9.75 6,273,732,729 58,795,094,314
2072/73 30.08 707,840,700 11.08 3,927,019,409 30,363,555,060
2071/72 17.17 348,254,007 10.45 3,019,711,175 26,661,129,863
2070/71 26.67 392,111,964 10.70 2,562,362,682 22,256,871,407
2069/70 24.14 354,827,828 10.90 2,297,805,464 21,651,267,380
Nepal Investment 2075/76 26.4 3,324,112,936 11.39 26,235,893,404 152,183,000,000
Bank Limited
2074/75 35.7 3,659,322,725 11.58 22,695,798,460 140,328,000,000
2073/74 29.3 3,114,131,140 11.58 20,367,202,860 125,669,000,000
2072/73 29.3 2,550,883,563 13.05 18,182,543,651 108,626,000,000
2071/72 30.9 1,961,852,380 9.54 11,754,293,710 90,631,000,000
2070/71 40.7 1,939,612,344 9.52 8,993,849,000 73,831,000,000
2069/70 46.2 1,915,027,932 10.01 7,813,057,000 62,429,000,000
NIC Asia Bank 2075/76 34.22 3,023,282,666 8.24 21,804,000,000 180,575,000,000
Limited
2074/75 16.62 1,334,861,927 8.66 15,350,010,000 151,219,000,000
2073/74 23.06 1,473,465,967 12.38 10,912,194,316 86,679,102,631
2072/73 28.31 1,066,906,232 10.69 9,193,013,294 69,487,997,265
2071/72 25.59 680,317,101 10.53 6,059,261,071 53,477,184,239
2070/71 35.98 831,588,872 11.84 5,725,861,568 44,984,218,467
2069/70 47.41 642,136,406 12.21 4,693,288,345 39,908,774,213
NMB Bank 2075/76 23.54 2,257,276,027 13.09 19,061,375,000 98,516,667,000
2074/75 21.86 1,853,792,753 14.78 16,851,254,000 84,507,136,000
2073/74 22.24 1,467,347,467 12.39 11,393,685,000 73,224,063,000
2072/73 22.1 1,115,064,628 9.34 7,790,514,000 64,781,464,000
2071/72 21.48 500,989,608 8.84 3,982,873,000 36,723,000,000
2070/71 20.5 409,922,982 9.91 2,918,892,000 27,087,000,000
2069/70 18.02 360,393,624 10.42 2,489,383,000 22,186,000,000

63
EPS (Rupees)
Bank Capital
Core Capital
Ratio (%)
(Rupees)
(Rupees)
(Rupees)
Name of Bank
Deposit
NPAT
F/Y
Prabhu Bank 2075/76 21.03 1,783,592,538 10.22 13,148,762,968 112,393,448,000
Limited
2074/75 12.58 967,034,844 10.82 11,430,641,456 97,259,665,000
2073/74 27.17 1,597,952,553 9.45 8,504,116,199 81,349,540,000
2072/73 26.75 1,117,363,714 10.62 6,985,571,384 60,940,868,000
2071/72 31.73 1,018,245,374 9.44 583,725,263 42,142,974,000
2070/71 -15.24 -304,851,936 7.65 1,088,499,748 19,835,166,000
2069/70 -40.23 -804,628,575 7.62 1,571,695,000 21,093,025,000
Prime Bank 2075/76 23.6 2,198,792,243 11.97 13,644,465,572 86,257,837,697
Limited
2074/75 21.49 1,726,246,109 11.43 11,659,258,818 81,304,476,188
2073/74 23.21 1,467,942,925 12.45 9,937,824,828 65,855,880,385
2072/73 30.11 1,115,759,677 10.76 5,776,701,505 48,342,121,058
2071/72 23.74 745,589,121 11.29 4,624,956,603 41,005,754,566
2070/71 20.97 553,447,114 11.53 3,888,556,422 34,045,262,660
2069/70 18.55 477,566,263 11.88 3,164,222,000 28,798,028,030
Sanima Bank 2075/76 28.22 2,258,067,506 10.63 13,364,410,000 92,140,000,000
Limited
2074/75 21.22 1,697,503,224 11.14 10,889,090,000 79,139,000,000
2073/74 26.31 1,304,103,406 14.07 9,870,186,114 57,754,000,000
2072/73 32.55 996,054,127 10.69 6,039,446,132 46,344,000,000
2071/72 24.47 624,141,298 10.13 3,734,498,766 34,045,316,000
2070/71 19.28 427,595,604 11.52 3,072,172,121 24,873,849,000
2069/70 15.13 305,061,132 13.91 2,565,034,704 17,789,329,000
SBI Bank Limited 2075/76 27.13 2,292,524,396 12.72 14,804,827,617 97,924,400,000
2074/75 25.16 2,023,511,124 13.38 13,728,773,698 84,269,200,000
2073/74 33.46 1,523,237,401 13.53 11,692,078,000 81,664,548,665
2072/73 36.78 1,331,881,801 10.98 8,169,663,000 65,213,519,724
2071/72 34.48 1,065,436,141 11.18 7,063,688,000 51,628,221,954
2070/71 34.83 922,984,007 10.19 5,892,028,000 54,492,993,606
2069/70 32.75 771,471,129 9.59 4,888,637,991 58,920,455,656
Standard Char- 2075/76 30.39 2,434,664,521 18.31 14,971,059,954 75,731,527,432.00
tered Bank Limited
2074/75 27.33 2,189,898,090 21.41 13,986,845,583 67,061,046,522.00
2073/74 35.49 1,421,596,136 19.58 11,975,101,524 63,872,885,000.00
2072/73 45.96 1,292,494,632 14.08 7,779,409,000 55,727,178,000.00
2071/72 57.38 1,290,025,348 11.67 6,111,788,000 57,286,482,000.00
2070/71 65.47 1,336,589,187 10.83 5,333,516,000 46,298,532,000
2069/70 65.7 1,217,940,751 11.03 4,828,551,000 39,466,453,000
Siddhartha Bank 2075/76 26 2,257,688,323 10.19 16,953,951,000 122,527,700,000
Limited
2074/75 26.45 1,904,061,504 10.99 13,187,005,000 101,748,200,000
2073/74 26.6 1,386,175,502 11.02 10,717,460,000 77,316,600,000
2072/73 41.53 1,254,918,004 8.78 7,708,558,000 64,934,400,000
2071/72 37.77 767,080,512 7.58 5,244,638,000 44,740,730,000.00
2070/71 38.63 700,534,999 8.39 3,995,774,000 35,414,010,000.00
2069/70 29.8 482,556,447 8.21 3,513,565,000 28,392,820,000.00

EPS (Rupees)
Bank Capital
Core Capital
Ratio (%)
(Rupees)
(Rupees)
(Rupees)
Name of Bank
Deposit
NPAT
F/Y
Sunrise Bank 2075/76 20.94 1,706,102,088 11.37 12,722,042,072 78,740,000,000
Limited
2074/75 18.13 1,476,971,853 12.59 10,925,126,067 69,480,000,000
2073/74 16.76 1,112,851,929 13.39 9,854,712,000 61,013,263,534
2072/73 23.93 951,378,476 11.13 6,541,746,000 51,650,280,064
2071/72 19.27 470,857,056 10.11 3,612,062,000 33,486,669,059
2070/71 11.03 246,772,655 10.69 2,874,243,000 26,616,667,279
2069/70 15.46 311,609,037 10.96 2,600,252,000 23,270,603,296
Century Bank 2075/76 8.04 676,407,831 13.46 10,170,770,000 65,488,597,980
Limited
2074/75 11.31 912,283,372 13.65 9,586,970,000 61,321,550,155
2073/74 9.18 501,365,807 13.91 6,665,547,473 42,593,653,750
2072/73 14.56 413,533,271 11.90 3,648,392,000 28,967,846,551
2071/72 12.3 260,864,190 10.35 2,603,332,000 24,948,567,976
2070/71 6.15 86,927,673 13.17 2,305,815,000 18,393,723,078
2069/70 0.09 66,371,596 11.78 1,309,096,335 11,396,473,762

65
Impact of Firm Specific Factors on the
Profitability and Stock Price of Nepalese
Commercial Banks
Manoj Kumar Bhatta1
Abstract
This study aimed to find the impact of firm specific factors on the profitability and stock
price of the Nepalese commercial banks. Out of 27 commercial banks, 15 were taken as
sample for the study and 8 years data from 2013 to 2020 were analyzed. Descriptive and
cross sectional research design has lent this study a framework for analysis. Correlation and
regression analysis with multicolliniarity test was conducted to analyze the effect of the
variables. The study found that there is significant but negative relationship between non-
performing loan (NPL) and profitability and significant but positive relationship between
reserve and profitability. The study has also found significant relationship between bonus
share and stock price of the commercial banks. Other variables under this study show
insignificant relation with the stock price. It has been concluded that profitability can be
increased by reducing the NPL. Likewise, stock price has been majorly dependent on the
bonus share declaration of the banks.
Keywords: Profitability, Stock price, Non-performing loan, Reserve, Capital, Bonus share
1. Introduction
1.1 Background
There are two approaches namely the fundamental approach and technical approach for
predicting share prices (Sharma, 2011). The former predicts share price on the basis of
financial, environmental and managerial factors, whereas the latter studies the past trends in
predicting future share price. However, a number of empirical studies have been conducted
on the determinants of stock prices. Some of these studies looked at the relationships between
stock prices and the factors that could impact on it. The link between fundamental factors
(e.g. firm earnings, dividends and book-value per share) and stock price changes has always
remained as the focus area of interest for market analysts, fund managers, and investors.
Investors take decisions to invest in particular shares of companies, keeping in view their
share prices. Theories suggest that there is an association between changes in share prices
and changes in financial fundamental variables (Nisa, & Nishat, 2011). Adhikari (2010)
1 Manoj Kumar Bhatta is a Faculty at Global College International (GCI) and currently also pursuing MPhil
in Management at Kathmandu University School of Management (KUSOM), Nepal.

Impact of Firm Specific Factors on the Profitability and Stock Price of Nepalese Commercial Banks
concluded that there are differences in financial position of high dividend paying and low
dividend paying companies. The stocks with longer ratio of dividend per share to book value
per share have higher liquidity. Sharma (2011) observed that earning per share is positively
significant to market price per share. Menike and Prabath, (2014) concluded that the internal
factors, firm specific factors such as dividend per share (DPS), earnings per share (EPS)
and book value per share (BVPS) affect positively and significant impact on the stock price.
With financial deregulation and market integration, the scope of activities, financial
institutions have been completely reshaped ranging from traditional intermediation products
to an array of new businesses. Poudel and Shrestha (2014) highlighted the research on the
basic objective of the study are to examine whether MPS of listed companies, especially for
selected companies under the study and to what extent the risk is involved in the investment
of common stocks of those. Shrestha (2013) found that the firm size and stock return have
positive relation. Book to market was found to have strong explanatory power to explain the
stock returns, which impacted the stock returns negatively. It was further concluded that both
the earnings yield and cash flow yield have negative relationship with stock return. As cited
by Dangol (2020), Sejuwal (2015) concluded that the firm size, book to market and earnings
yield have the explanatory power to explain the cross sectional stock returns. Firm size was
found to have positive impact and book-to-market was found to have negative relation with
stock returns respectively. Returns from investment are subjected to variations owing to the
movement of stock price, which depends on various factors which could be internal or bank
specific such as earning per share, bank size, and book to market equity (Shafana, 2013).
Nazir et al. (2010) examined the relationship between share price volatility and dividend
policy for the period of 2003 to 2008 in 73 firms listed in Karachi Stock Exchange (KSE).
The study applied fixed effect and random effect models on panel data. They found that
share price volatility has significant negative association with dividend yield and dividend
payout. The cross sectional regression is used to analyze the relationship of share price
with dividend yield and payout ratio. This study also proposed that signaling effect is also
relevant in determining the share price volatility. Gabriel et al. (2012) investigated the
relationship between volatility and stock price in Nigerian Stock Market. The study used
month end stock price of four major companies from the period January 2005 to December,
2009 data. The results revealed that out of the four companies, only two companies’ stock
price was predicted by volatility in their stock prices The major result of the study showed
stock price volatility could not predict their current stock price and hence volatility was
insignificant and negatively correlated. In this context, this study tries to analyze the impact
of firm specific factors on the profitability and the stock price determination of the Nepalese
commercial banks.

67
1.2 Statement of the problem

Stock market plays important role both by making provision of capital and encouraging its
effective use for economic growth. Most of the countries of the world heavily depend on
the stock market to manage economic development of the country. Development of capital
market in general and stock market in particular is a must for a sound industrial development
of the country. Capital market institutions help to mobilize the surplus unit into the deficit
units for productive investments. Most of Nepalese investor invests their fund in some
securities because of less knowledge about risk-return behaviors of the securities (Adhikari,
2010). Various researchers have found important fundamental factors that determine the
share prices for different markets, viz., dividend, retained earnings, size, earnings per share,
dividend yield, leverage, payout ratio, and book value per share. A stock price in an efficient
(price) market provides investors with a good measure of any firm’s performance and its
value. Srinivasan (2013) noticed that, understanding the impact of various fundamental
variables on stock price is very much helpful to investors as it will help them in taking
profitable investment decisions.
It is important to know the firm specific factors that impact the profitability of the firm.
Firm's profitability is linked to the stock price determination. In this study, both the factors
that impact firm profitability and the factors that impact the stock price of the firms are
analyzed. The share market is making the records each day and commercial banks are not
performing as expected. Therefore it is important to know the firm specific factors that
impact on the profitability and share price of the banks in the Nepalese context. The above
discussion shows that the studies dealing with impact of firms specific variables on share
price volatility and stock return are of greater significance. Though there are findings in the
context of different countries, no such findings using more recent data exist in the context
of Nepal. Hence, this study focuses on analyzing the relationship of firm’s specific variables
with profitability and share price in Nepalese commercial banks.
1.3 Objectives of the study

The major purpose of the study is to analyze the relationship between firm specific factors
on the profitability and stock price in Nepalese commercial banks. However, the specific
objectives of this study are as follows:
i. To investigate the relationship between profitability as dependent variable and capital,
reserve and Non-performing loan as independent variable.
ii. To find the impact of firm specific factors on the stock price determination of the
Nepalese commercial banks.
2. Literature Review
Khan (2020) findings of the study indicated Non-performing loan has negative effect on
Market Price of Stock and Earning per share has positive effect on Market stock prices. As
cited by Khan (2020), Menke and prabahat (2014) found that earnings per share has less
effect on stock prices in the Colombo Stock Exchange. Also, Book value per share and

dividend per share showed a positive effect on the stock price. Modigliani (1961), study
showed that in assessing the merits of a company's dividend, investors calculate the dividend
yield and this shows how much a company pays out in dividends each year relative to its
share price. Azhagaiah and Priya (2008) results indicated that higher dividend per Share
creates positive reaction to market price of the share and there is an increase of price of share
in market on shareholders wealth. Ajanthan (2013) findings of the study were that there is
a positive relationship between the dividend policy and profitability of the company in Sri
Lanka. As cited by Ajanthan (2013), Sijolnur and Abdul Basit (2013) demonstrated that the
dividend policy did not have a consistent pattern of influencing the financial performance
of companies in the US. Wasfi and Maysa (2013) found that the relationship of dividend per
share and market price of stock found a positive and significant relationship, non-performing
loan and Market price of stock have negative and insignificant relationship. With the help
of Panel data approach concluded that there is positive correlation between dividend and
market price of stock considering EPS, BVPS, Retention Ratio; while dividend yield and
profit after tax have negative relation with market price of stock.
Paudel (2014) studied the MPS of financial institutions and found that there is higher positive
correlation with major financial indicators such as Earning yield, NWPS and DPS and such
relationship in significant. It also concluded that the market price of share in Nepal is not
indicative of a company's financial performance in stock market. The study also found that
there is the largest fluctuation in EPS and DPR, the relationship between DPS and EPS is
positive; however, it is not significant. There may be various other factors besides EPS to
affects MPS and the growth rate of dividend is inconsistent
Reserve
Capital
Net profit Stock price
Non Performing loan
Bonus Share
The reserve, capital and non-performing independent variable for the dependent variable Net
profit. Reserve capital, Non-performing loan, bonus share and net profit are the independent
variables.
Research designs namely cross sectional research have been used for the purpose. This study
has employed cross sectional research design to deal with the fact-finding and searching
adequate information associated. Under cross sectional research design, correlation and

69
regression analysis has been carried out. Multiple regression models have been used to
understand the directions, magnitudes and forms of observed relationship.
Though there were 27 commercial banks in Nepal till 2020, all of them did not provided
scope for the study. Out of 27, 15 were taken as sample for the study for the period of 8
years from 2013 to 2020 making total of 150 observations. The data collected for the study
are quantitative and based on fact. The quantitative data were taken from the annual reports
of the studied banks. These data were then analyzed using different tools and technique to
produce understandable results. Both the statistical and econometric models are used for
analyzing of secondary data.
a. The model
The econometric models employed in this study intends to analyze the relationship between
independent variables which are capital, reserve, Non-performing loan, bonus share and net
profit and dependent variables which are net profit and stock price. The equation is estimated
in the form of:
Model 1: NPt=ß0+ ß1NPLit + ß 2Reserveit+ ß 3 lnCapitalit + έit

Where, NPit= Net profit, NPLit = Non-performing loan, Capital it = natural logarithm
of capital, Reserve, Έit= error term.
Model 2: SPit= ß 0+ ß1NPLit + ß 2Reserveit+ ß 3 lnCapitalit + ß 4 NPit + ß 5 BSit + έit
Where, NPit= Net profit, NPLit = Non-performing loan, Capital it = natural logarithm
of capital, NPit = Net profit, BSit = Bonus Share, Έit= error term.
4. Results and Discussion

The descriptive statistics consists of number of observations, minimum value, maximum value,
mean, standard deviation associated with variables under consideration. Table summarizes the
descriptive statistics of dependent and independent variables used in this study during the
period 2013 through 2020 associated with 15 samples commercial banks of Nepal.
4.1 Descriptive statistics

N Minimum Maximum Mean Std. Deviation
NPL 120 .00 5.34 1.4475 1.12505
Net Profit 120 3.75 9.09 6.1138 .53643
Capital 120 10.81 24.27 14.2888 3.03277
Stock price 120 125 3600 711.46 664.365
Bonus share 120 .00 68.00 15.5829 12.94208
Reserve 120 3.75 7.15 6.2908 .56934

In Table above, Non-performing Loan (NPL) has variation of 5.34 (min 0.0 and max 5.34).
This suggests that banks are having maximum of 5.34 percent of non-performing loan of
their total assets at maximum. The average NPL is 1.45 percent in the last 8 years. Few of
the banks have far above the average NPL. It is also noteworthy to analyze the statistics
related to net profit which mean value is 6.13 percent and where maximum value is 9.09
percent. Here also we can find a respectable difference in the minimum and maximum
values of capital which has been increased from 10.81 to 24.27 due to the fact that there is
the provision of increasing the capital base of the banks by Nepal Rastra Bank. The values
reported for Log capital (min=10.81, max=24.21). The stock price minimum value is 125
and maximum value is 3600. Bonus share has been declared up to 68 percent. This reveals
that majority of the banks studied have relatively the less bonus payment as shown by the
mean value of 15.58 percent. The reserve ratio is minimum 3.75 percent and maximum 7.15
percent with average of 6.3 percent.
4.2 Correlation analysis

NPL Net Capital Stock Bonus Reserve
Profit price share
NPL NPL 1 -.232* -.064 -.103 -.119 -.065
Sig. (2-tailed) .011 .489 .262 .195 .484
Net Net profit -.232* 1 .259** .099 .074 .518**
Profit Sig. (2-tailed) .011 .004 .283 .419 .000
Capital Capital -.064 .259** 1 .155 .073 .383**
Sig. (2-tailed) .489 .004 .092 .428 .000
Stock Stock Price -.103 .099 .155 1 .536** .218*
price Sig. (2-tailed) .262 .283 .092 .000 .017
Bonus Bonus Share -.119 .074 .073 .536** 1 .106
share Sig. (2-tailed) .195 .419 .428 .000 .250
Reserve Reserve -.065 .518** .383** .218* .106 1
Sig. (2-tailed) .484 .000 .000 .017 .250
**. Correlation is significant at the 0.01 level (2-tailed).
*. Correlation is significant at the 0.05 level (2-tailed).
The correlation matrix shows that there is negative but significant relationship between
net profit and non-performing loan (-0.232*). It means that with increase in the NPL net
profit decreases.Net profit is significant and have positive relation with capital (0.259*)
and indicates that rise of capital increase the net profit of the banks. Bonus share and stock
price are positively correlated and has significant relationship. It means that whenever banks
declare the bonus share price increases. The studied banks reserve is significantly related to
the net profit, capital and stock price and are positively correlated as well. In an attempt to
detect multicollinearity, a correlation matrix was constructed to infer the extent of correlation
among the variables studied.

71
4.3 Regression analysis and multi-collinearity test

The customary levels of significance are 0.10, 0.05, and 0.01 and so on. In case of this
research work, 5 percent (0.05) level of significance is considered for analysis. Therefore,
If, p>.05: Null hypothesis will be accepted, and If, P<.05: Null hypothesis will be rejected.
Model 1
Model R R Square Adjusted R Square Std. Error of the Estimate
1 .558a .311 .293 .45101
a. Predictors: (Constant), Reserve, NPL, Capital

The Pearson correlation coefficient (R) result of .558 shows a positive correlation. The
strength of the relationship between Net profit and capital, Reserve and NPL is moderate.
But this prediction may vary by 0.451 as shown by the figure in the column of standard error
of estimate (SEE). A close examination of the results presented above indicates that the R2
value of 0.311 indicates that about 31.1% of the total systematic variations in the Net profit
(dependent variable) were due to the variations in independent variables. This means that
about 68.9% of the systematic variations in the net profit are left unexplained hence captured
by the external factors. Also, the adjusted R-square of 0.293 shows that after adjusting for
the degree of freedom the entire variables taken together could still explain about 29.3% of
the systematic variations in net profit. This implies that the regression line has average fit
and thus a minimum forecasting power.
Model 2
Model R R Square Adjusted R Square Std. Error of the Estimate
1 .565a .319 .289 0.560
a. Predictors: (Constant), bonus share, capital, NPL, net profit, reserve

The Pearson correlation coefficient (R) result of .565 shows a positive correlation. The
strength of the relationship between Stock price and bonus share, capital, net profit and
reserve is moderate. But this prediction may vary by 0.560 as shown by the figure in the
column of standard error of estimate (SEE).
A close examination of the results presented above indicates that the R2 value of 0.319
indicates that about 31.9% of the total systematic variations in the Stock price (dependent
variable) were due to the variations in independent variables. This means that about 68.1%
of the systematic variations in the stock price are left unexplained hence captured by the
external factors.
Also, the adjusted R-square of 0.289 shows that after adjusting for the degree of freedom the
entire variables taken together could still explain about 28.9% of the systematic variations

in Stock price. This implies that the regression line has average fit and thus a minimum
forecasting power.
Coefficientsa
Unstandardized Standardized
Collinearity Statistics
Coefficients Coefficients
Model t Sig.
Std.
B Beta Tolerance VIF
Error
1 (Constant) 3.242 .467 6.946 .000
NPL -.094 .037 -.197 -2.555 .012 .994 1.006
Capital .011 .015 .062 .742 .460 .852 1.174
Reserve .453 .079 .481 5.761 .000 .852 1.174
a. Dependent variable: net profit

The regression coefficient of NPL (b1) is -0.094 which implies that an increase of one
percent in NPL decreases Net profit by 0.094 percent on average if the other factors remain
constant. The regression coefficient of capital (b2) is 0.011 which also implies that increase
in one percent capital increases net profit by 0.011 percent on average if the other variables
remain constant. Similarly the regression coefficient of Reserve (b3) is 0.453 which implies
that an increase of one percent in reserve increases net profit by 0.453 percent. But the
estimates of b1, b2 and b3 may vary by 0.037, 0.015, and 0.079 respectively as indicated by
standard error.
Coefficientsa
Model Unstandardized Standardized t Sig. Collinearity
Coefficients Coefficients Statistics
B Std. Beta Tolerance VIF

Error
2 (Constant) -684.001 689.854 -.992 .324
NPL -22.884 47.328 -.039 -.484 .630 .930 1.076
Capital 14.420 18.393 .066 .784 .435 .847 1.181
Reserve 187.649 111.105 .161 1.689 .094 .659 1.518
Net Profit 60.232 115.299 .049 .522 .602 .689 1.451
Bonus share 26.332 4.017 .513 6.555 .000 .975 1.025
a. Dependent Variable: Stock price

The regression coefficient of NPL (b1) is -22.884 which implies that an increase of one
percent in NPL decreases Net profit by 22.884 percent on average if the other factors remain
constant. The regression coefficient of capital (b2) is 14.420 which also implies that increase

73
in one percent capital increases net profit by 14.42 percent on average if the other variables
remain constant. Similarly the regression coefficient of Reserve (b3) is 187.65 which implies
that an increase of one percent in reserve increases net profit by 187.65 percent and similar
to bonus share and net profit with 60.23 and 26.33 percent. But the estimates of b1, b2, b3,
b4 and b5 may vary by 47.328, 18.39, 111.1, 115.3, and 4.02 respectively as indicated by
standard error.
Collinearity Diagnosticsa
Variance Proportions
(Constant)
Model Dimension Eigenvalue Condition Index
Reserve
Capital
NPL
1 1 3.658 1.000 .00 .02 .00 .00
2 .314 3.415 .00 .94 .01 .00
3 .025 12.121 .07 .03 .95 .04
4 .004 30.882 .93 .01 .04 .96
a. Dependent Variable: Net Profit

Collinearity Diagnosticsa
Variance Proportions
Bonus share
Condition
(Constant)
Net Profit
Model Dimension Eigenvalue

Index
Reserve
Capital
NPL
1 1 5.261 1.000 .00 .01 .00 .00 .00 .01

2 .438 3.468 .00 .37 .00 .00 .00 .48
3 .266 4.450 .00 .53 .01 .00 .00 .50
4 .028 13.647 .02 .01 .94 .01 .02 .00
5 .004 37.031 .55 .00 .04 .83 .01 .00
6 .003 39.247 .43 .08 .00 .15 .97 .00
a. Dependent Variable: Stock price

In this case, we find multicollinearity as percent of Reserve and Net profit where Eigen value
is less than he maximum correlation is above and condition index is greater than 10 which
thus confirm the presence of multicollinearity. It means that these variables do not contribute
in the dependent variables.
Drury (2008) documents that if the muticollinearity among two variables is 70% and above,
then it is a case of concern. In the present study, we find cases of multicollinearity as percent

of capital and Reserve where Eigen value is less than he maximum correlation is above
and condition index is greater than 10. A VIF test conducted to further check the extent of
multicollinearity among the independent variables revealed a mean VIF of 1.17 which thus
confirm the presence of multicollinearity.
Normal p-plot of regression

The P-P plot compares the observed cumulative distribution function (CDF) of the
standardized residual to the expected CDF of the normal distribution
Graph shows that data are scattered with the diagonal line. It means there is higher Skewness
distribution and data sets are not close enough to support each other.
4.4 Hypothesis Test

H1: There is a significant relationship between net profit and Non-performing loan. On the
basis of the individual statistic, NPL passed the test of statistics at 5% level of significance
under the two-tailed test. The ρ- value of 0.012 is less than α of 0.05. This shows it is
statistically significant. This means there is significant relationship between net profit and
NPL of the studied banks.
H2: There is a significant relationship between net profit and Capital. On the basis of the
individual statistic, Capital passed the test of statistics at 5% level of significance under
the two-tailed test. The ρ- value of 0.460 is greater than α of 0.05. This shows it is not
statistically significant. This means there is no significant relationship between net profit and
capital of the studied banks.
H3: There is a significant relationship between net profit and reserve. On the basis of the
individual statistic, reserve passed the test of statistics at 5% level of significance under
the two-tailed test. The ρ- value of 0.00 is less than α of 0.05. This shows it is statistically

75
significant. This means there is significant relationship between net profit and reserve of the
studied banks.
H4: There is a significant relationship between Stock price and Non-performing loan. On the
basis of the individual statistic, NPL passed the test of statistics at 5% level of significance
under the two-tailed test. The ρ- value of 0.630 is greater than α of 0.05. This shows it is not
statistically significant. This means there is no significant relationship between Stock price
and NPL of the studied banks.
H5: There is a significant relationship between Stock price and capital. On the basis of the
individual statistic, Capital passed the test of statistics at 5% level of significance under
statistically significant. This means there is no significant relationship between Stock price
and capital of the studied banks.
H6: There is a significant relationship between Stock price and reserve. On the basis of the
individual statistic, reserve passed the test of statistics at 5% level of significance under
statistically significant. This means there is no significant relationship between stock price
and reserve of the studied banks.
H7: There is a significant relationship between Stock price and Bonus share. On the basis of
the individual statistic, bonus share passed the test of statistics at 5% level of significance
under the two-tailed test. The ρ- value of 0.00 is less than α of 0.05. This shows it is
statistically significant. This means there is significant relationship between stock price and
bonus share of the studied banks.
H8: There is a significant relationship between net profit and Stock price. On the basis of
the individual statistic, net profit passed the test of statistics at 5% level of significance
under the two-tailed test. The ρ- value of 0.602 is greater than α of 0.05. This shows it is not
statistically significant. This means there is no significant relationship between net profit and
stock price of the studied banks.
5. Conclusion
This study aims to find the relationship between the firms' specific factors in determining
the profitability and stock price of the commercial banks in Nepal. It analyze the impact of
reserve, Non-performing loan, and capital on the profitability of the bank and net profitability
and bonus share relation with the stock price. The study shows that Non-performing loan
and reserve impact profitability of the bank and bonus share impact on the stock price of
the commercial banks under study. This means there is significant relationship between
reserve and net profit and NPL and net profit of the studied banks. This means banks need
to maintain the adequate reserve and lower non-performing loan to increase the profitability
of the studied banks. Also, there is significant relationship between stock price and bonus

share of the studied banks. This means stock price is significantly impacted by the bonus
declared by the studied banks. Other factors have no such significant impact in determining
the stock price.
6. Implications of the Study

This study provides significant insight about dynamics of profitability and stock price
determinants in the Nepalese commercial banks and helps in making optimal decisions to
increase the performance of the bank. The study includes firm specific variables such as
size, reserve, Non-performing loan, net profit, and bonus share. It examines the relationship
between these firm specific variables with profitability and stock price. Because once the
relation among these firm specific variables and performance is identified then firms will
react in the same way in order to increase their financial performance. The relationship
between firm specific factors with the profitability and stock price have not been investigated
in a single study in banking sector in previous research. In addition, this study not only
benefits the financial sectors but it is of equal significance for other non- financial corporate
sector of Nepal.
7. Limitation of the Study

This study focused on finding the impact on profitability and stock price through capital,
reserve, bonus share, and Non-performing loan using 8 years data of 15 commercial banks
of Nepal. There are several other variables that influence the stock price and profitability of
banks. This study has only analyzed the data through regression and there are other various
methods that could bring different results. Results are based on the data availability and may
require further analysis.

77
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79
Impact of Porter’s Generic Strategy on Firm
Performance with reference to Nepalese
Retail Banking Sector
Makshindra Thapa1
makshindrathapa.s1@gmail.com
Abstract
Porter’s generic strategies are the proven and pervasive strategic options in achieving
competitiveness and better firm performance. This paper aims in examining the effect of
Porter’s generic strategies (low-cost, differentiation, and focus) on firm performance in the
context of Nepalese retail banks, a more competitive service industry. This study applies
casual comparative research design and the data have been collected through administering
questionnaire survey from 75 senior bank managers of 18 Nepalese commercial banks who
being engaged in strategic affairs. The econometric model has been constructed to measure
the expected effect of the strategies on firm performance. The descriptive analysis, Pearson’s
correlation analysis, and multivariate regression analysis were conducted. The empirical
results of correlation analysis and multiple regression analysis produced consistent results
indicating positive associations between generic strategies and firm performance. The
empirical results from regression analysis declared higher positive and significant impact
of low-cost on firm performance. Similarly, positive effect of differentiation strategy and
focus strategy on firm performance was reported. The findings suggested that pursuing low-
cost strategy provides more financial returns with comparison to differentiation and focus
strategies. The finding also suggested for combination of low-cost and differentiation (and
focus) strategies could provide better competitiveness and firm performance.
Keywords: Generic Strategy, Low-cost strategy, Differentiation strategy, Focus strategy,

Firm performance
1. Introduction
1.1 Background
The contemporary business environment is highly dynamic and competitive, those bring
many challenges in managing operations. The fast growing globalization and technological
developments, managers face more turbulent and unstable market. Managing business
in conventional tradition lead business towards ultimate failure, rather managers have to
understand dynamic environment and creating a competitive advantage by management of
1 Makshindra Thapa, PhD is the Lecturer of Management at Tribhuvan University Patan Multiple Campus,
Lalitpur

Impact of Porter’s Generic Strategy on Firm Performance with reference to Nepalese Retail Banking Sector
various strategies. Varadarajan and Clark (1994) argue that business strategy is generally
explained in terms of achievement and maintenance of competitive advantage in specific
product-market domains. Cannon (1968) thus has defined strategies as the directional action
decisions which are required competitively to achieve the company’s purpose
Strategy is the primary means of reaching a focal objective, and recent planning techniques
suitable in dealing in dynamic and turbulent business environment. The assessment of a
company’s success potentials should include criteria focused on the market aspects and
criteria focused on competitive strength. Therefore, Schendel and Hofer (1979) have
stated that strategy provides directional cues to the organization that permit it to achieve its
objectives, while responding to the opportunities and threats in its environment. Thus, with
strategies, firms achieve competitive advantages through best utilization of the resources.
As Nepalese retail banking sector has faced various quantum changes after 1990s with
response to many policy reforms and initiations taken in financial liberalization and
privatization by Nepalese government. Such policies resulted in the entry of many domestic
and foreign investments in many industries, including the retail banking sector. Due to
growing competition from national and foreign competitors, the sector then become one
of the fast growing and more competitive in terms of technological developments and
innovations of service processes that led the market more competitive and turbulent. The
bank managers adopted many strategic initiatives to defend and grow their business market,
ensuring competitive advantages. Similarly, application of the generic strategies of Porter’s
(1980) including; low-cost, differentiation, and focus seen common and imperative within
this industry.
Research in business strategy development has come a long way since the early work in
the 1960s. Andrews (1998) explains that economic strategy is viewed as the purposive
development and utilization of the firm’s capabilities to exploit existing or evolving
opportunities in the business’s competitive environment at an acceptable level of risk.
Porter's (1980) model of generic strategies is the dominant paradigm in the literature on
corporate strategy (Hill, 1988; Miller and Dess, 1993). According to Porter's framework,
a business can maximize performance either by striving to be the low-cost producer in an
industry or by differentiating its line of products or services from those of other businesses;
either of these two approaches can be accompanied by & focus of organizational efforts on a
given segment of the market. many previous studies (Rasheed et al., 2020, Muji et al., 2019,
Potjanajaruwit, 2018, Luliya, et al., 2013, Walker, & Ruekert ,1987, Miller, & Friesen, 1986,
Yamin et al., 1999, Murray, 1988, Woo, & Cooper, 1982) have noted that organizations
pursuing Porter's generic strategies achieve better performance.
1.2 Study objective

Porter’s generic strategies; low-cost, differentiation and focus are pervasive and applicable
in all industry settings. They are focal means to achieve competitive advantages. The issue
faced by managers is to deploy appropriate strategy according to the environmental need for
better performance. In addition, implementation wrong strategy without knowing that in the
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long-term periods they are destructing their industry and their business as well. This study
aim is to examine the impact of Porter’s generic strategies (low-cost, differentiation, and
focus) on firm performance in the context of Nepalese retail banking sector.
1.3 Research question and hypothesis

Based on conceptual reviews and empirical results of previous studies, this study is the
research question; which of the three Porter’s generic strategies (Low-cost, differentiation,
and focus) positive and significant impact on firm performance? By considering research
question and aforementioned objectives, the study aims in testing the three of the following
hypotheses;
H1 (A): The low-cost strategy has positive and significant impact on firm performance of
the banks.
H1 (B): The differentiation strategy has positive and significant impact on firm performance
of the banks.
H1(C): The focus strategy has positive and significant impact on firm performance of the
banks.
2.1 Strategy
Pearce & Robinson (2007) have defined strategy as the game plan. Strategy is the direction and
scope of an organization over the long term which enables the firm to achieve an advantage
in a changing environment through its configuration of resources and competencies with
the objective of fulfilling stakeholder’s expectations (Johnson et al. 2005). According to
Porter (1998), the purpose of formulating a strategy is to relate the firm to its environment.
Competitive strategy therefore means being different, deliberately choosing to perform
activities differently or to perform different activities from those of competitors in order
to deliver a unique mix of value (Porter, 1930). Firms pursue various strategies to achieve
competitive advantages through more market shares. The strategies related to business in
relation to compete with competitors are often known as competitive strategy. A competitive
strategy includes all the activities that a firm is doing to attract customers, withstand
competitive pressure and improve its market positions resulting in a competitive advantage.
2.2 Porter’s competitive strategy

Porter (1985) developed a typology of three generic strategies for creating a defensible
position and outperforming competitors in a given industry. The generic strategies provide
direction for firms in designing incentive systems, control procedures, and organizational
arrangements. Whereby lower cost is the ability of the firm to design, produce, and market
a comparable product more efficiently than its competitors. Differentiation is the ability
to provide unique and superior value to the buyer in terms of quality of the offering and

customer service. When they are focused on a market niche, they are called cost focus and
focused differentiation.
Porter (1985) also proposed that a firm’s competitive advantage in an industry would be
determined by its competitive scope, that is, the breadth of the company’s target market.
This strategy typology was a dominant theory in the 80s to explain the major forces in
the market which affected firm competitive advantage and performance? These strategies
in responding to dynamic and risky product market within the industry settings are more
relevant in existing globalized economy. Thus, managers worldwide apply these strategies
as basic means in achieving competitive advantages and sustainable operations.
2.2.1 Low-cost strategy

Porter (1980) has described low-cost strategy as the broad strategy which emphasizes low-
cost relative to competitors In this strategy, a firm targets to become the low-cost producer in
the industry in order to gain competitive advantage. Further, a firm is considered to be a low-
cost producer if it sells its products at average industry prices but earns a profit higher than
its competitors, or may sell at a price below average to gain significant market share (Porter,
2008). Griffin (2005) states that low-cost strategy is a strategy in which an organization
attempts to gain a competitive advantage by reducing its costs below the costs of competing
firms. Similarly, David (2011) argues that low-cost strategy emphasizes producing
standardized products at a very low per-unit cost for consumers who are price sensitive.
A firm can achieve low-cost position through economies of scale, advanced technology,
preferential access to raw materials among others. According to Porter (1980) in order to
achieve a low-cost advantage, an organization must have a low-low-cost strategy, low-cost
manufacturing, and the core competencies.
Porter (1985) defines a low-cost strategy as trading of standard products combined with

aggressive prices. He has shown the relationship between low-cost strategy and firm
performance, and he found that low-cost strategy is a successful way to realize stable
competing advantage through reducing and controlling the cost. Unlike to its meaning,
the adaptation of low-cost strategy refuses offering product/services of inferior quality but
ability of the firm in producing and selling the competitive product/service at an appropriate
price. Low-cost strategy is favored by strategist as a successful low-cost strategy usually
infiltrates the entire firm, as evidenced by high efficiency, low overhead, limited perks,
intolerance of waste, intensive screening of budget requests, wide spans of control, rewards
linked to cost containment, and broad employee participation in cost control efforts (David,
2017). Similarly, low-cost strategy outperforms competitors as it helps in increasing firm
performance through selling the product/service with a lower price and still earning same
level of profitability.
2.2.2 Differentiation
Differentiation strategy is the other basic competitive strategy propounded by Porter. A
firm’s differentiation refers to the development of a unique product or service (Porter, 1985).

83
In the view of Griffin (2005) differentiation strategy is a strategy in which an organization

seeks to distinguish itself from competitors through the quality of its products or services.
Appropriate adaptation of differentiation strategy requires that the firm create something
that is unique in the industry, thus permitting the firm to command higher than average
prices. This strategy requires the development of unique goods or unique services in an
industry which are unmatched by relying on customer loyalty to the brand. A company can
be offered higher quality, performance or unique features that each of them can justify the
higher prices. The value added by the uniqueness of the product may allow the firm to charge
a premium price for it (Kiechel, 2010).
Porter (1985) argues that if the product or service is unique, this strategy provides high
customer satisfaction and loyalty. In addition, Porter (19985) showed the relationship with
firm performance and the advantages that firms earn from pursuing differentiation strategy
referring to realizing higher incomes compared with competitors because of mark trust,
quality, and perception that clients have for the company product. Therefore, if customers
perceive the product or service as unique, they are loyal to the company and willing to pay
the higher price for its products (Venu, 2001). David (2017) has suggested that a successful
differentiation can mean greater product flexibility, greater compatibility, lower costs,
improved service, less maintenance, greater convenience, or more features. In contrast,
differentiation does not guarantee competitive advantage, especially if standard products
sufficiently meet customer needs or if rapid imitation by competitors is possible (David,
2017).
2.2.3 Focus
Focus strategy is a generic strategy proposed by Porter (19985) in which firms concentrate
on a particular group of customers, geographic markets, or product line segments. Focus
strategy is a strategy in which an organization concentrates on a specific regional market,
product line, or group of buyers (Griffin, 2005). The focuser’s basis for competitive
advantage is either lower costs than competitors serving that market segment or an ability to
offer niche members something different from competitors. In focus strategy, a firm either
can introduce low-cost and priced products to specific market or differentiated products are
sold in specific niche of the market.
A successful focus strategy depends on an industry segment that is of sufficient size, has good
growth potential, and is not crucial to the success of other major competitors. Strategies such
as market penetration and market development offer substantial focusing advantages (David,
2011). Similarly, According to David (2017) focus strategy has two alternative types; low-
cost-focus and focus differentiation. The low-cost focus strategy offers products or services
to a small range (niche group) of customers at the lowest price available on the market.
The focus differentiation is a best-value focus strategy that offers products or services to a
small range of customers at the best price value available on the market. Consistently, banks
that adopt this strategy usually provide interest rates above the market price (Berman et
al., 1999). As for the focus strategy, in contrast to the other strategies, it emphasizes on the

narrow market segment to compete in the industry. This strategy is based on the premise that
the firm will be able to serve narrow strategy targets more effectively and efficiently than
competitors that serve a wider target (Devlin, 1995).
2.3 Competitive strategy and performance in banking industry

In the banking industry, a key determinant of the success of the differentiation or low -cost
strategies depends on whether the bank understands the market structure (Young, 1999). The
distribution systems, technology, segmentation, pricing, product development, branding,
quality services, and bank relationships are ways of achieving a differentiation strategy
(Farrance, 1993). A study with a sample of Indonesia banks conducted by Rustamblin et
al. (2013) shows that a differentiation strategy has a stronger association with a bank's
performance compared to other strategies (i.e., low-cost strategy, as well as an integrated
strategy). On the contrary, Hahn and Powers (2004) found that banks are hardly getting
superior benefits when applying the differentiation strategy. Differentiation strategies may
have significant limitations to be applied in the service industry because of the simple and
easy to imitate nature of differentiation in financial services, except when the target market
is very sophisticated and has complete knowledge, which is highly unlikely.
The empirical results of Karyani and Rossieta (2018) indicated that although both low-cost
and differentiation strategies have positive effects on contemporaneous performance, only
a low-cost strategy allows a bank to have persistent superior performance in the following
period. Further empirical test which considered bank characteristics provide consistent
empirical results with the primary empirical model, suggesting that the empirical test
results are robust (Karyani, & Rossieta, 2018). The study Wanjiku, & Deya (2021) found
out that low-cost strategy, differentiation strategy, focus strategy, and innovation Strategy
significantly and positively affected the performance of Microfinance institutions in Kenya.
In addition, the study recommends that low-cost strategy is an important strategy embraced
by MFIs to enable them to survive competition in the market (Wanjiku, & Deya, 2021).
Rasheed et al. (2020) highlighted the role of business strategy to create a competitive
advantage. They found the business strategy has a vital role in the competitive advantages to
gain the market. Similarly, Muji et al. (2019) examined the effect of competitive strategies
and performance of construction organizations in the large construction industry in
Indonesia. Their found that competitive strategies positively impacted on the organizational
performance. In addition, Potjanajaruwit (2018) studied impact of strategic factors on
performance in case of startups of Thailand. He obtained direct positive effect of the factors
on the competitive advantage of startups, and competitive advantage had a direct positive
effect on the performance of startups in Thailand. Luliya, et al. (2013) also found that Porter’s
competitive strategies positively and significantly enhance firm performance through
performance measurement. Consequently, Kinyuira (2014) examined the effects of porter’s
generic competitive strategies on the performance of savings and credit cooperative societies
in Murang’a, Kenya and found significant positive effects of low-cost, differentiation and
focus strategies on the performance of the Saccos. Hahn and Powers (2004) did a study to

85
examine the impact of generic strategies on banks. Their Findings indicated that performance
of banks using low-cost was significantly higher than that of banks using stuck in the middle
strategy.
Yamin et al. (1999) found that companies utilizing both cost-leadership and differentiation
strategies are effectively more likely to enhance their firm performance and financial
management compared with other companies pursuing a single generic strategy. In addition,
Murray (1988) also suggests that firms using either low-cost or differentiation strategies
outperform stuck in the middle competitors, firms using both strategies simultaneously
should be able to outperform rivals using only one or the other. However, Walker and
Ruekert (1987) found that differentiation strategy has a stronger influence on performance
as compared to a low-cost strategy. Miller and Friesen (1986) also revealed that the cluster
of business units that show distinct competencies in the areas of differentiation, low-cost and
focus dramatically outperform all the others.
The empirical results of these studies have confirmed that Porter’s generic strategies
provide competitive advantages. The application of all three strategies provides short term
and long term competencies and hence better firm performance. The effectiveness of each
of these strategies depends upon the environment of the particular industrial context. The
current study aims in filling the gap with examining impact of the generic strategies on firm
performance in service industry context, taking account of Nepalese retail banks.

The conceptual framework as depicted in Figure 1 indicates expected relations between firm
performance (dependent variable) and three generic strategies; low-cost, differentiation, and
focus (independent variables).
Figure 1: Schematic diagram of the theoretical framework
Cost leadership strategy
Differentiation strategy Financial performance
Focus strategy
3. Research Methods
3.1 Research design and data
This study applied casual comparative design of research as the basic objective of the study
strives to examine the impact of competitive strategy variables on banking performance.
The primary source of information collected from questionnaire survey is the source of data.

3.2 Data collection procedure

The self-administered questionnaire survey was conducted to collect information required.
To meet this purpose, altogether 150 questionnaires were distributed to the managers of 18
Nepalese commercial banks of three category- state owned, joint venture and public sector.
The usable responses received from the respondent were 75 only with moderate response
rate. The data collection process ended with 45 days in the months of April and May 2018.
The respondents comprised managers of decision level, especially top level managers of
each bank.
The questionnaire comprised a total of 23 items including; personal profile, competitive

strategies, and performances of their banks after reviewing related literature. The 18 items
of strategy and performance related items of questionnaire have been used in the past by
many researchers. This study has used self-reported or perceived performance measures,
all of which have been used in prior research (e.g. Datta, 1991; Datta, & Grant, 1990;
Govindarajan, & Fisher, 1990) to measure firm performance. These dimensions are the
following: Return on investment (PROI), Earnings per share (PEPS), Shareholder value
(PSVA), Cash flow (PCFL), Revenue growth (PRGR), and Risk of the generic strategies
(PRISK). The five point Likert scale used to measure responses, ranging from 5 (strongly
agree) to 1 (Strongly disagree).
The dimensions used for measuring the constructs postulated in this study had been explicitly
tested in the literature and found to be valid and reliable measures. First, a large pool of
items for each construct was generated from a thorough review of the literature on generic
strategy. Consistent with the conventional process, the questionnaire was pre-tested with
some managers that were asked to indicate ambiguities or difficulties with the instruments
and to make any suggestions for improvement. After modifications were carried out, the
revised instrument was tested on four academics and, after further revisions; a pilot test with
potential respondents was carried out.
3.3 Validity and reliability of the research instrument

The reliability statistics based on Cronbach’s reported in Table 1 indicated reliability of
instrument. Both strategy and performance scales exceeding the minimum threshold of 0.7
suggested by Nunnally (1967).
Table 1 : Reliability statistics for measurement scales

Scales Cronbach’s Alpha No. of items
Generic strategy scales .72 13
Perceived performance scales .77 5

87
3.4 Data processing and analysis techniques

As depicted in the conceptual framework, three of the Porter’s generic strategies have
an impact on the firm performance. Based on the previous literatures and evidences the
following model is created for the analysis:
Yfp =α+ +b1 low-cost+b2 differentation+b3 focus + εi

Where,
Dependent variables (Yfp): Firm performance.
α= Intercept
b1= Partial slope coefficient of Low-cost strategy
b2= Partial slope coefficient of Differentiation strategy
b3= Partial slope coefficient of Focus strategy
εi = Error terms/ disturbing variables
4. Results
4.1 Descriptive analysis of the study variables
Table 2 reports descriptive statistics of the study variables including low-cost, differentiation,
focus, and performance status of the banks.
Table 2 : Descriptive Statistics of the study variables

Items of strategy and performance Mean Std. Deviation
Low-cost strategy
Aim for cost reduction 4.18 .85962
Strive to achieve operating efficiency 4.45 .71916
Attempt to achieve economies of scale 4.05 .69079
Strive to achieve competitive prices 4.29 .66964
Group mean score 4.24
Differentiation strategy
Having strong differential advantage relative to competitors 4.16 .65427
Differential advantage lies in bank's service 3.99 .80818
Differential advantage lies in bank's reputation 3.96 .91565
Differential advantage lies in wide service range 4.25 .76811
Focus strategy

Items of strategy and performance Mean Std. Deviation

Use of market segmentation 3.95 .78136
Having clear segmentation and positioning strategies 3.72 .87329
Try to meet niche market needs 3.77 .81435
Undertaking extensive market research 3.39 .95330
Applying competitor analysis 3.74 .92906
Bank performance
Higher Return on investment [PROI] 4.23 .70934
Increased earnings per share [PEPS] 4.20 .67369
Higher shareholder value [PSVA] 4.11 .75858
Increased cash flow [PCFL] 3.88 .67351
Higher revenue growth [PRGR] 4.22 .64459
Among three generic strategies analyzed, the low-cost strategy has found commonly favored
by the bank managers (mean score=4.24). All four items of this strategy; cost reduction,
operating efficiency, economies of scale and competitive prices have mean values exceeding
4 clearly indicate that application of these low-cost strategies are advantageous to banking
firms. In addition, the managers have emphasized more on achieving operating efficiency
and achieving competitive prices (interest rates and processing costs) as to become cost
leader in the industry. In response to four strategies concerned to differentiation strategy,
the managers perceived that those banks could achieve differentiation advantage through
providing wider range of services to customers and presence of differential advantages
relative to competitors also valued highly. The results also suggested that bank managers
have perceived differentiation strategy as the most significant one in achieving competitive
advantages (mean score= 4.34).
In contrast to low-cost and differentiation strategies, the focus strategy has found to be less
preferred by managers in the process of gaining strategic advantage. The focus strategy
has obtained a mean score of 3.71. The mean scores for all five used measures found to be
below than four. Similarly, the managers have rated overall performance of theirs banks as
satisfactory (mean score= 4.13). They mean scores of four performance items; higher rate on
investment, earnings per share, higher shareholder’s values and higher revenue growth are
exceeding four suggested better firm performance status of the banks.

Table 3 depicts the results of Pearson correlation analysis for generic strategies respectively
low-cost, differentiation and focus strategies that are taken as a prediction in defining
association with the dependent variable bank performance.

89
Table 3 : Correlation matrix of the study variables (n = 75).

Variables Correlations Low-cost Differentiation Focus Performance
Low-cost Correlation Coefficient 1

Sig. (2-tailed)
Differentiation Correlation Coefficient .268* 1

Sig. (2-tailed) .019
Focus Correlation Coefficient .189 .365** 1

Sig. (2-tailed) .101 .001
Performance Correlation Coefficient .296** .225 .195 1

Sig. (2-tailed) .009 .051 .091
*Correlation is significant at the 0.05 level (two-tailed)

**Correlation is significant at the 0.01 level (two-tailed)
Source: Author
The results have indicated to positive relations of three generic strategies low-cost,
differentiation, and focus with firm performance. The correlation coefficient of low-cost
and performance is .293 (.009) indicating a statistically significant relationship between the
variables. The result declares that low-cost strategy would increase firm performance of the
banks. Similarly, the correlation coefficient of firm performance and differentiation strategy
is .225 (.051). The focus strategy has a correlation coefficient of .195 with performance,
declaring the positive effect of focus on performance. Both of these correlations are
significant at 0.10 level only.
4.3 Regression analysis

In order to measure the impact of independent variables in dependent variable “firm
performance,” multivariate regression analysis has been used. The results of regression
analysis are presented in Table 4. The calculated value of R is .61 shows moderate relationship
between predictor variables and R2 is .33 indicates to the moderate explanation ability of the
independent variable- performance variation. The calculated value of F statistic is 4.85(.004)
which means that the model is statistically important with the significance level α = 0.05.
Table 4 : Regression analysis of dependent variable “Firm

performance,” n = 75. Source: Author
Variables Coefficient estimates SE t p
Low-cost .284 .109 2.621* .011
Differentiation .147 .107 1.370 .175
Focus .091 .093 .969 .336
Note. Constant=1.992, F (3,72)= 4.851 **, p<.005, R=.61, R2=.33

B: non-standardized coefficients; S.E: standard error of variables; β: standardized

coefficients; t: t-statistic; p: significant level
The results have indicated to mixed impact of generic strategies on firm performance. The
low-cost strategy is positively connected with firm performance (B= .284, p = .011). The
impact of low-cost on performance is statistically significant. The differentiation strategy also
seemed to have positive impact on the dependent variable but, the relation is not significant
(B= .147, p = .175). Similarly, beta coefficient of focus strategy indicates possible positive
impact on performance however the result is not statistically significant (B= .091, p = .336).
5. Discussions
Porter (1985) has stated that all of his three generic strategies have a positive impact on firm
performance, and careful application of these strategies is required. The empirical result
of this study has revealed that the low-cost strategy has relatively stronger and significant
impact on bank performance. The differentiation and focus strategies have positive but
statistically insignificant effects on firm performance. The result supports previous literature
(Karyani, & Rossieta ,2019; Wanjiku, & Deya ,2021; Kinyuira, 2014; Rasheed et al., 2020;
Muji et al., 2019; Potjanajaruwit, 2018; Luliya, et al., 2013; Walker, & Ruekert ,1987; Miller,
& Friesen, 1986; Yamin et al., 1999; Murray, 1988; Woo, & Cooper, 1982).
The regression outputs have provided results for research hypotheses. The first hypothesis
“the low-cost strategy has positive and significant impact on firm performance of the banks”
has been accepted. The result has declared that low-cost strategy has a positive relationship
with firm performance.
Thus, the bank pursuing the low-cost strategy will increase its performance. The result has
indicated that the banks adopting low-cost strategy will have higher firm performance in
comparison to the competitors. As Nepalese retail banks passes through intense competition
and ability of banks to control costs leads to economical operations, thus more market share
and financial benefits are possible in competition.
The regression result related to second hypothesis stated as “the differentiation strategy
has positive and significant impact on firm performance of the banks” has been rejected.
The positive influence of differentiation on firm performance existed, but the result is no
statistically significant. The result implies that Nepalese banks offering unique schemes
and facilities attain good financial returns. The technological advancement and intense
application of digitalization in banking products has led banks to be innovative and introduce
unique banking products getting more customer attention. This strategy enables banks to
adopt market dynamics and meet customer aspirations.
Similarly, the third hypothesis stating “the focus strategy has positive and significant impact
on firm performance of the banks’ has been rejected as influence of focus strategy failed
to prove statistically significant result. Thus, among three generic strategies, the low-cost
strategy found to be relatively strong and significant impact on firm performance of the banks.

91
The result supports findings of Wanjiku and Deya, (2021) as well as Hahn and Powers (2004).
Fürth more, the result has suggested that banks concerned with segmentation of market and
applying “low-cost” and/or “differentiation” strategies as per nature and requirement of a
“niche” market. In addition, focus strategy also gives a competitive advantage to firms in
condition when no competitors exist, which is also termed as the first mover advantage.
6. Conclusion
This paper sought to examine the impact of Porter’s three generic strategies namely; low-
cost, differentiation, and focus on firm performance specified to firm performance. The
conceptual framework and research hypotheses were based on the existing literature, which
provided sufficient empirical evidence to show a strong link between the porter’s generic
strategy types and firm performance. The Pearson’s correlation and multiple regression
analysis applied test relation of three generic strategies on firm performance of the banks.
The results of both inferential analyses found to be more consistent and declared to the
positive relationship between firm performance and generic strategies. The empirical results
of this research have declared that three of Porter’s generic strategies are done positive
influences in bank firm performance. The impact of low-cost strategy is significant and
higher impact on firm performance than differentiation and focus strategies. However,
differentiation and focus strategies also are important in achieving more financial returns
thus, the managers could pursue combination of these strategies as to achieve more market
and financial returns.

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95
Impact of Right Share Issue on Share Price
of Commercial Banks in Nepal
Joginder Goet1
goetj15@gmail.com
Abstract
This study has examined the effect of issue of right share on share price movement in the
banking sector using share price and price relative as the predictors of share price movement.
Banking sub-index and index relative of different periods were used for analysis. Five
different periods of time were selected to observe the share price movement considering
the announcement date as the reference point of time. Based on the secondary sources of
data, a correctional analysis was administered to examine whether the share price and price
relative (banking index) has any relationship with the share price change in case of Nepalese
commercial banks.
Coefficient of determination and probable error were used to find how much percentage of
the variation in the share price could be explained by the occurrence of right share issue and
likewise, whether or not the relationship was significant. The results reveal that right share
announcements have the signaling effect on share price movement. The share prices and
banking indices of selected banks have decreased after the announcement of right share. The
results suggest that the information irregularity behavior tempts a negative change in share
price after the announcement of rights share. The implication of the results is that investors
can forestall the nature of change in share price after rights issue announcement and develop
strategic plans to expand the trading activity.
Keywords: NCC Bank., Right announcement, Right share issue, Price relative, Index
relative.
1. Introduction
1.1 Background
Capital is needed for every organization for various purposes and varies from one to another,
depending upon the types of companies and its peculiarities. Most of the companies need
capital for expansion, diversification and to cope with various financial dearth situations.
Right share is an option-based financing approach where existing shareholders are given
the right, but not the obligation, to purchase the proportionate number of shares that is equal
to the fraction of their current holding (Holderness, & Pontiff, 2016). Company uses long
term financing to finance in the long-term assets like land and investment, which remain
1 Joginder Goet is Asst. Professor at Shanker Dev Campus, Trubhuvan University, Nepal.

permanently with the company. Under the situation of under-capitalization, there may be
loss of various opportunities because of financial crisis and under the situation of over-
capitalization; most of the funds may remain idle, it can result in occasional over liquidity
which will definitely affect the profitability of the company. Both situations are harmful for
a company and may not be able to sustain for a longer period of time (Van Horne, 2002).
Encouraging stock price movements are detected in the case of seasoned equity issue (Barns,
& Walker, 2006; Kang, & Stulz, 1996). However, the long run response to seasoned capital
issues is stated to be mostly negative in the United States (Allen, & Soucik, 2008; Bayless, &
Jay, 2003). But, in the Asian countries the response to seasoned capital issues is observed to
be positive (Barns, & Walker, 2006; Kang, , & Stulz, 1996). According to the theory of rights
share offering, the price of shares increases after the announcement date and the price again
decrease after the allotment of shares to the extent of value of rights. So, if the same things
happen in the share market scenario, then the research like this seems to be an unnecessary
one. But, in practical life, the theory is not being followed. Problems regarding rights offering
in Nepal like, no company can issue their rights share at discount and premium, thus, all
companies are issuing rights share at par value. It causes vast deviation between market price
per share and subscription price per share. The main objective of this study is to examine the
rights share practice and its impact on share price movement of commercial banks in Nepal.
1.2 Objective
The primary and major objective of this study is to examine how the provisions and
announcement of rights share have been related regarding the difference in share price in the
case of Nepalese commercial banks.
1.3 Research hypothesis

To analyze the data available, t-statistics has been used to test the significance of the
difference between the share prices under the following hypothesis:
: There is no significant difference between the share price movement before and after
the announcement of the rights share offerings.
: There is significant difference between the share price movement before and after the
announcement of the rights share offerings.
2. Review of literature
Modigliani and Miller (1958) disclosed that in the absence of information irregularities and
taxes, the manner in which firms finance their investments is irrelevant. They also found
that when managers believe that the capital market undervalues equity of the firm, the
optimal financing choice is to issue risk- free debt or use a pre-emptive stock issue. White
and Luszting (1980) examined the result of the pooled regression provides more definitive
information on the price behavior associated with the announcement of rights offering. Since

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the t-statistics on the announcement date dummy variables were statistically significant at the
1% level or better. The first hypothesis that average investors believe that there is negative
information associated with a right offering and cannot be rejected.
The second hypothesis, capital markets in this instance are inefficient, assumes that
management and investors’ expectations differ and that investors require time to assimilate
information. Since the coefficient on the dummy variables for the five days subsequent
to the announcement of the rights offering were not statistically different from zero to
5% confidence level, the null hypothesis that prices adjust quickly and unbiased to new
information cannot be rejected.
Marsh (1980) stated that UK companies raise virtually all of their new equity capital via
the rights issue. Companies can guarantee the subscription of their issue having them
underwritten and in recent years, this procedure has been adapted for 90% of UK rights
issues. Underwriting is usually carried out on a fixed fee basis representing at least 1.25%
of the total money raised, and hence it is clear that quite substantial sums of money are
involved.
Hansen (1988) concluded that the underwritten right offerings are associated with a price
decline of more than four percent just prior to the sale. This is opposing to the public offering
where there is little price concession. He contends that this price dip is due to the transaction
costs for placing new securities. For an underwritten right offering, transaction costs that
include flotation cost and price concession are higher than public offerings. So, he advocates,
it is not surprising that companies prefer public offerings than right offerings.
Lukose and Rao (2003) and Heron and Lie. (2004) specified management issue new shares
only when the market overvalues the shares. They exposed record of firms that have greater
stock price performance prior to the declaration of equity offerings. This finding is similar
to the finding of Thenmozhi, Malhotra, and Gopalaswamy (2007), who concluded that the
share price should not decrease if the firm issues safe debt (default and risk free) to finance
investment. This is because, based on the assumption that managers act on behalf of existing
shareholders, rational investors assume that managers issue new shares only when they
believe the stock is overvalued. In contrast to the above, Holderness and Pontiff (2013),
stated that, if the major reason for issuing shares is to take advantage of overvalued equity,
this would explain the rather limited use of rights offerings.
Paudel (2015) concluded that rights share was the major source of capital increment for
the listed companies in Nepal and the right share of commercial banks enclosed maximum
portion in total right issuance. Finance companies and development banks ranked the second
and third position regarding the coverage in the total rights issuance. About 96 percent of
the total rights issue of listed companies was subscribed. Holderness and Pontiff (2016)
found that on an average only 64 percent of the existing shareholders participated in
valuable domestic rights offerings in the U.S. They noted that the stock market responds
more negatively to the higher wealth transfers. Their findings suggest that agency conflicts
influence the use of rights offers.

Bist (2017) examined the empirical relationship between stock market development and
economic growth in Nepal over a period of 22 years from 1993 to 2014. Findings of this
study represent that the market capitalization has a positive impact on economic growth both
in the long as well as in the short run period of time. The result presented that inflation has
a negative and significant impact on GDP per capita in the long as well as in the short run.
Karanja (2006) recommended that firms that announce rights issue must consider information
asymmetry as this highly determines the firm’s share prices after successful rights issue and
also examined whether post offer price share performance is related to the decision to issue
rights instead of a firm’s commitment offering, if market offering is an important factor
affecting post issue stock returns. Olesaaya (2010) observed negative abnormal returns
prior to announcement of rights issue, positive abnormal returns during the announcement
and negative results thereafter, Miglani (2011) observed positive excess returns of 32 right
issues from India. They reported a gain of 1.42% in the shareholders’ wealth on the day of
announcement of right issue. Bashir (2013) investigated the market reaction to rights issue
announcement news by employing an event study methodology. The study found evidence
of existence of positive abnormal returns on event date. However, this gain in shareholders’
wealth was statistically insignificant. The study concluded that the reaction of Karachi
Stock Market is an indication of no rights issue announcement affects that is no wealth
maximization for investors.
Sakwa (2013) examined the results of the study that stock returns react positively to rights
issue announcements. A positive mean abnormal return was recorded over the event period
with the highest abnormal returns being on day t+2. There was a statistical difference
between mean abnormal returns observed during the event period and estimation period for
eighteen events and no statistical significance for one event. It was recommended that the
Capital market intensifies supervision of market participants to enforce compliance with
market regulations and also implement education programs to raise awareness among market
participants and reduce information asymmetry. Otieno and Ochieng (2015) concluded the
stock prices and returns changes significantly in the post announcement period than in the
preannouncement period. Based on the cumulative average abnormal return, the study
concluded that rights issue announcement results into a negative abnormal stock return for
the listed firms.
Kendirli and Elmali (2016) observed that finding of the study concluded that the investors
of deposit banks can yield abnormal returns in the period of ten days after right share
announcement. Even if it is not statically significant, the another finding of study is that
100% of abnormal returns of six days; 80% of abnormal returns of ten days and 60% of
abnormal returns of twelve days are negative. Pathak and Gupta (2018) conducted a research
on rights offering and its effect on share price movements taking five commercial banks
as sample size. In his research, he found that the right share offering announcement has
the signaling effect on the share price of the commercial banks. The market price of share
is influenced by right offerings. The share price of Nepalese commercial banks decreases
after the announcement of right share in spite of the increase in the market index in the
corresponding period. This in not consistent with the theory of right offering.
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The purpose of the study is to answer “Does issue of right share of the banks change the
share price movement?” It also explores the effect of issue of right share on market price of
share of the banks by using different indexes. For this purpose, share price, price relative,
banking sub-index and index relative have been considered as the most reliable and efficient
to check the market price of the share of the bank. These indexes also help in making rational
decisions and future planning about the issue of right share for the betterment of the market
price of the banks.
3.1 Research design

The study has used descriptive and correlational research design to test the objectives of the
study. It relies upon discretionary data that is collected form yearly reports of merolagani.
com. The banks have been chosen as a purposive technique out of twenty-seven commercial
banks in Nepal. The study has used ten days and ninety days before announcement,
announcement day, seven days and hundred eighty days after announcement date.
For measuring the share price movement of issue of right share, different indexes have been
considered to evaluate the impact of issue of right share. In this study, it deals with the
issue of right share of selected three banks. In order to analyze the market price movement
of banks before and after issue of right share, the different variables like share price, price
relative, banking sub-index and index relative etc. have been used.
3.2 Results and discussion

With the help of financial data available in merolagani.com of different periods of before and
after announcement of issue of right share, share price movement of different periods have
been computed and analysed.
The share price movement before and after the rights issue along with the movement of
market index simultaneously. The price relative shown in the third column is calculated
by either adding the percent increase in the price or subtracting the percent decrease in the
price of the share from 100 base value. Here, the base value 100 is considered as beginning
index value which is established for the price 90 days before the right announcement date.
Percentage change in the price, in the column four, is calculated by differentiating the
announcement date price from price of the share on each relative point of time and dividing
it by the price on 90 days before the announcement. The same method is followed for the
calculation of values for market index in columns six and seven. These changes are shown
in tables.
Note. I = 90 days before the announcement date (base date); II = 10 days before the
announcement date; III = The day of announcement; IV = 7 days after the announcement
date; V = 180 days after the announcement date.

Table 1 : Analysis of Share Price Movement of Nepal Credit and Commerce Bank
Selected Share Price % Change Banking Index % Change
Points of Price (Rs.) Relative from Base Sub-Index Relative from Base
Time 1 2 3 4 5 6
I 245 100 - 1152.81 100 -
II 235 95.92 -4.08 1016.74 88.20 -11.80
III 250 102.04 2.04 1036.82 89.94 -10.06
IV 241 98.37 -1.63 1017.51 88.26 -11.74
V 218 88.98 -11.02 1013.15 87.88 -12.12
Source: http://merolagani.com/CompanyDetail
Table 1 shows the share price movement of NCC Bank before and after the rights issue along
with the movement of market index simultaneously. According to the theory, the share price
increases after the right share announcement date until the book close date. Second column
of table shows the actual prices have fallen after the seven days and hundred eighty days of
announcement. On the other hand, the banking sub-indices have decreased after seven and
hundred eighty days of right announcement. While looking column 3, percentage change in
price relative from its base price has decreased by 4.08 percent in between periods I and II
but has increased by 2.04 percent in between periods II and III. In between periods III and
IV, the percentage in price relative has again decreased by 1.63 percent however, it has also
decreased by 11.02 percent in between IV and V. On the other hand, in the column 6, the
percentage change in index relative of all the periods have decreased by 11.80 percent,10.06
percent, 11.74 percent, 12.12 percent respectively from its base index. The fluctuation in
share price is not consistent with market. Thus, we can say that, the fluctuation in price of
share is not only due to general market movement. There must be some signalling effect of
right share offering.
Theoretically, the price of share should increase after the rights announcement for few days
and then after the price should decrease by the value of right. However, in the case of NCC
Bank, instead of increasing price, it has decreased after seven days of right announcement to
Rs. 241 and after hundred eighty days to Rs. 218 from Rs. 250. So, it has not met the theory.
Table 2 : Analysis of Share Price Movement of Kumari Bank Ltd.

Time 1 2 3 4 5 6
I 275 100 - 1208.27 100 -
II 250 90.91 -9.09 1134.04 93.86 -6.14
III 261 94.91 -5.09 1219.82 100.96 0.96
IV 246 89.45 -10.55 1165.05 96.42 -3.58
V 257 93.45 -6.55 1105.27 91.48 -8.52

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Table 2 shows that the share price has been in decreasing trend from the base date till the
hundred eighty days of announcement. According to the theory, the share price increases
after the right share announcement date until the book close date. While analyzing the
percentage change in price relative and index relative, both have been in fluctuating trend.
Percentage change in price relative after seven days of announcement has decreased by
10.55 percent. However, percentage change in banking index has decreased by 3.58 percent
only. Thus, we can say that, general market movement along with right share offering has
been responsible for the price decrease. Theoretically, the price of share should increase after
the rights announcement for few days and then after the price should decrease by the value
of right. However, in the case of Kumari Bank, instead of increasing price, it has decreased
after seven days of right announcement to Rs. 246 and after hundred eighty days to Rs. 257
from Rs. 261. So, it has not met the theory.
Table 3: Analysis of Share Price Movement of Prabhu Bank Limited

Time 1 2 3 4 5 6
I 451 100 - 1349.98 100 -
II 315 69.84 -30.16 1260.00 93.33 -6.67
III 314 69.62 -30.38 1231.71 91.24 -8.76
IV 305 67.63 -32.37 1242.81 92.06 -7.94
V 278 61.64 -38.36 1004.60 74.42 -25.58
Table 2 shows that the share price has been in decreasing trend from the base date till the
hundred eighty days of announcement. According to the theory, the share price increases
after the right share announcement date until the book close date. The percentage change
in price relative has been in decreasing trend from the base but index relative has been in
fluctuating trend. Percentage change in price relative after seven days of announcement has
decreased by 32.37 percent. However, percentage change in banking index has decreased by
7.94 percent only. Thus, we can say that, general market movement along with right share
offering has been responsible for the price decrease. Theoretically, the price of share should
increase after the rights announcement for few days and then after the price should decrease
by the value of right. However, in the case of Prabhu Bank, instead of increasing price, it has
decreased after seven days of right announcement to Rs. 305 and after hundred eighty days
to Rs. 278 from Rs. 314. So, it has not met the theory.

Table 4 : Correlation Coefficient between Share Price and Banking Index
S.N. Sample Banks r P. E 6 P.E.
1 NCC Bank 0.440 0.1936 0.243 1.458

2 Kumari Bank Limited 0.554 0.307 0.209 1.254
3 Prabhu Bank Limited 0.737 0.543 0.138 0.828
Source: SPSS Output
In case of NCC Bank, there has been a medium degree of positive correlation (r = 0.440). The
coefficient determination (r2) = 0.1936, which means that about 19.36 percent of variation in
the share price is explained by the general market movement. The coefficient of correlation
is greater than P.E. (P.E. = 0.243) which proves that correlation is significant. So, we can
conclude that the share price behavior of NCC Bank is due to general market movement.
While analyzing the correlation coefficient of Kumari Bank Ltd., there has been a moderate
positive correlation (r = 0.554) between share price and general market movement. This
relation has been further provided by the coefficient of determination which is 0.307 that is
30.70 percent, which means 30.70 percent of the price of KBL has been explained by general
market movement. The correlation coefficient (r) is greater than P.E. Thus, correlation is
significant which implies that the share price behavior of KBL is due to general market
movement.
In case of Prabhu Bank Limited, there has been a high degree of positive correlation (r =
0.737) between share price movement and general market movement. The coefficient of
determination which is 0.543 or 54.30 percent, which means that general market movement
has explained only 54.30 percent variation in the share price. Correlation coefficient (r) is
greater than P.E. implying it has been significant. So, we can conclude that the share price
behavior of Prabhu Bank Ltd. is because of general market movement.
The relationship between share price and Banking index is always positive. It means, Banking
indices increase due to increase in share price and vice-versa. In the above calculation of
three sample banks, all of them have been positively correlated. Sometimes, result may be
negatively correlated because the Banking index indicates the average increase or decrease
in share price of all listed banks. When individual share prices are independent from each
other, some may increase and some may decrease.

103
Table 5 : T-test of Share Price and Banking Index of Sample Banks
Sample Banks Test for Result
Nepal Credit and Share Price 2.306 -2.985 Accepted

Commerce Bank
Banking Index 2.306 -1.433 Accepted
Kumari Bank Limited Share Price 2.306 4.070 Rejected
Banking Index 2.306 0.256 Accepted

Prabhu Bank Limited Share Price 2.306 0.589 Accepted
Banking Index 2.306 -1.050 Accepted
Source: SPSS Output

Table 5 shows that the calculated value of t-test -2.985 in the case of NCC Bank., whereas
the tabulated value at 5 percent level of significance and 8 degree of freedom is 2.306. Since
the null hypothesis has been accepted, it means the share prices have not been changed
significantly before and after the announcement of rights offering. In case of Banking
Indices, the result shows that there has not been significant difference in general market
movement before and after the announcement of rights offering because t-value tabulated
(2.306) is greater than the t-value tabulated (-1.433).
The t-value calculated in case of Kumari Bank Ltd. is 4.070, whereas the tabulated value
at 5 percent level of significance and 8 degree of freedom is 2.306, it means the differences
between share prices before and after rights offering has been significant. But, the difference
in the Banking indices is insignificant because t-value tabulated is greater t-value calculate.
Thus, in this case, null hypothesis that there is no significant difference between share price
movement before and after the announcement of rights offering is rejected and thereby the
alternative hypothesis that there is significant difference between share price movement
before and after the announcement of rights offering is accepted.
In case of Prabhu Bank Ltd., the share price has not been changed significantly before and
after the announcement of right offering (t-value calculated = 0.589 t-value tabulated =
2.306). There has not been significant changed in general market movement before and after
the announcement of issue of right share (t-value calculated = -1.050).
So far it has been observed that in case of NCC Bank and Prabhu Bank, there has not been
obvious impact of rights offering on the share price movement. But this has not hold true
in case of Kumari Bank. Change in share prices of Kumari Bank has not been due to the
announcement of rights offering. It can be attributed to the general market movement.
4. Conclusion
The results discussed above reveal that the right offering announcement has the signaling
effect on the share price of the selected banks. The fluctuation in price of share is not only

due to general market movement. There must be some signaling the effect of right share
offering. Theoretically, the price of share should increase after the rights announcement for
few days and then after the price should decrease by the value of right. The general market
movement along with right share offering has been responsible for the price decrease. The
relationship between share price and Banking index is always positive. It means, Banking
indices increase due to increase in share price and vice-versa.There has not been obvious
impact of rights offering on the share price movement in case of NCC Bank and Prabhu
Bank. But this has not hold true in case of Kumari Bank. Change in share prices of Kumari
Bank has not been due to the announcement of rights offering. It can be attributed to the
general market movement.
The rights offering have some significant impact on the share price. The general market
movement to a greater extent in Nepal also influences the market price of share. It is believed
that as the capital market gets matured and developed, rights issue practice would contribute
a lot to raising funds for every company
This study is a try to establish a link between right share issue announcements and market price
movement. This link is important because it is documented that the right share issue announcement
affects share price negatively and it conveys there is an irregularity in the market.
The results reveal the information irregularity behavior which brings a negative change in
market price after the announcement of rights and there is evidence of reducing market price
after the rights announcement. Investors can anticipate the nature of change in share price
after rights issue announcements and develop strategic plans to improve the trading activity
in the market.
5. Discussion
Initial public offering and right share offering are the two main means preferred by Nepalese
banks to collect the obligatory capital. The right offering announcement has the signalling
effect on the share price of the commercial banks. However, the right announcement gives a
negative signal to the stock market. The finding is not consistent with the result of Paudel’s
(2015) study, who found that the market price of share is influenced by right offerings. The
share price of Nepalese commercial banks decreases after the announcement of right in spite
of the increase in the market index in the corresponding period. This is consistent with the
theory of right offering in case of NCC Bank and Prabhu Bank but not in case of Kumari
Bank. However, the finding is consistent with the result of the earlier study by Pathak and
Giri (2008). The irregularity in the share price movement after the right announcement may
be either because of an inefficient market or leak of information before it becomes formally
public. Therefore, future study can be carried out to identify the cause of the irregularity in
share price in case of Kumari Bank by testing the efficiency of the Nepalese capital market.

105
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107
Conceptualizing Intersectionality between
Work-family Conflict and Career Progress
of Married Women Employed in Nepalese
Financial Sector
Gaurav Ojha1
ojhagaurav84@gmail.com
Abstract
This study examines the intersectional relationship between work-family conflict and
career progress of married women employed in the financial sector within Kathmandu
Valley. Although both work and family are important dimensions of human life, in
Nepalese context the intersectional relationship between gender roles, work and family
responsibilities and career progress has been inadequately studied. Hence, this research
aims to conceptualize work-family conflict by examining the intersectional relationship
between socio-demographic factors, antecedents of work-family conflict and career progress
of married women employees in the context of Nepalese Financial Sector. In this study
intersectional research design has been used to analyze relationships between variables
together with ninety (N=90) married women employees as research participants. Results of
both descriptive and inferential statistics indicate that asymmetry still remains prevalent and
permeable among married women employees regarding their work-family interfaces and
involvements. Hence, antecedents of work family conflict intersect a predictive association
with subsequent existential experiences, ambition gaps and perceptions that negatively
influences career progress of married women. Based on the findings, this study recommends
a sustainable corporate culture and human resources management practices that remains
sensitive to gender issues and also assimilates complex and conflicting necessities of both
work and family involvements.
Keywords: Work-family conflict, Career progress, Sustainable corporate culture, Human

resource practices
1 Gaurav Ojha is the Faculty at IEC College of Arts and Fashion. He is also the visiting Faculty of Sunway
International Business School & Kathmandu University School of Arts, Nepal.

Conceptualizing Intersectionality between Work-family Conflict and
Career Progress of Married Women Employed in Nepalese Financial Sector
1. Introduction
1.1 Background
This study examines the intersectional relationship between work-family conflict and career
progress of married women in the context of Nepalese financial sector. In Nepalese context,
different studies have examined antecedents of work- life balance and work-family conflict and
its potential consequences on career satisfaction, job satisfaction and well-being of employees
in financial sector (Adhikary, 2018; Pathak, 2018; Acharya, & Padmavathy, 2018). However,
possibilities of differentiated understanding using an intersectional approach when it comes to
conceptualizing work-family conflict by acknowledging distinct contextual experiences of being
married, woman and employed in Nepalese financial sector remains as a research gap.
Moreover, the importance of the intersectional approach used in this study for analyzing
work-family conflicts has been confirmed by the Gender Equality Index, 2019 published by
European Institute for Gender Equality. As the survey exemplifies, certain groups of people,
especially married women employees are expected to carry the double burden of work and
family and are always at disadvantage in their search for reliefs from constant pressures of
work-family conflict (Gender Equality Index, 2019).
Even with ever increasing inclusion of women as employees in Nepalese Financial sector
regarding positions of top level managers, executives and leadership positions in these
organizations, still women are discouragingly underrepresented. As evidence indicates
according to Nepal labor force survey 2017/18 (Central Bureau of Statistics, 2019) human
resource employed in financial services consists of 63,000 men and 55,000 women, hence
in terms of percentage gender disparity only entails to 6.78 %, however when it comes
to executive and leadership positions within financial sector gender disparity remains
enormous and still there is a sharp contrasts between supply of women with relevant degrees
in financial sector and executive position occupied by women employees.
More importantly, among different factors that influence married women’s career
advancement in an organizational context, as compared to men, women employees are
perceived as having work-family conflict and these perceptions result in glass ceiling
barriers regarding their career progress (Hoobler et al., 2009). More importantly, Hoobler
et al. (2009) have indicated that both male and female top-level managers still perceive
women employees as having greater family-work conflict and this perception has significant
implications for career advancement of women employees. Therefore, it is necessary to
conceptualize the prevalence of work-family conflicts within the experiences of married
women employees. After all, the impact of work family conflict remains as a glass ceiling,
potential stereotype and perceptual bias regarding their career progress.
Besides, in Nepalese context work family conflict is not perceived as a serious problem
for a married woman because in a collectivist society dominated by masculine orientations
regarding gender roles, women are expected to share the burden of family responsibilities
exclusively (Hofstede et al., 2005). And, gender roles prevalent within Nepalese culture still

109
categories women as responsible for family matters, hence exclusively incompatible with
higher organizational roles and responsibilities.
In a survey conducted by McKinsey & Company entitled closing the gap leadership
perspectives on promoting women in financial services, nearly half of senior-level women
say that they continue to accept most of household responsibilities, while just 13 % of their
male peers do the same. More importantly, as the survey indicates, women in entry-level
roles in financial services seldom envision themselves in a top executive position and most
of the entry-level women in financial services have concerns about balancing family and
work commitment (Chin et al., 2018).
However, there is no study in Nepalese context that acknowledges gender inequalities within
both work patterns and family structures where women before men are expected to carry the
double burden of work and family. More importantly, this study examines contextual effects
on work – family conflict incorporating a range of contextual demographic characteristics
and intersectional experiences that subsequently results into negative perceptions and
stereotypes regarding career progress of married women.
Besides, no other study has examined issues related with work-family conflict from the
perspective of Sustainable Development Goal-5 that aims to overcome this leadership
and empowerment gap by eliminating many root causes of gender discrimination and
career progress barriers within both private and public spheres by 2030, and this study
acknowledges work-family conflict as an important hindrance for career progress of married
women employed.
2. Literature Review and Theoretical Framework

Different and considerable studies have examined, analyzed and evaluated work–family
conflict experienced by women employees in different organizational contexts. This present
study has also examined the restrictive effect of work-family conflict on career progress
of married women employees in the context Nepalese Financial sector. For developing
conceptual framework various theoretical frameworks and relevant/recent literature has
been reviewed on time pressures, involvement misbalance and spill-over strains of family
responsibilities on career progress of married women employees as antecedents of work-
family conflict.
2.1 Theoretical framework

Within a historical frame for conceptualizing work-family conflict, initially bounded
theory recognized that women are more likely to experience inter-role conflict invoking
incompatible demands from the work and family domains (Greenhaus, & Beutell, 1985).
Regarding spill-over strains of work family conflict, boundary theory by Pleck (1977)
proposed that boundaries between work and family are asymmetrically permeable with
unequal frequency and there are gender differences in the pattern of involvement.

Similarly, regarding time pressures this study builds its theoretical orientations from the
rational model, this model proposes that people who spend more time on either work or family
domains may experience mutual propositions of conflict in each domain (Gutek et al., 1991).
In addition, for involvement misbalance this study develops its theoretical foundations from
role theory. Role theory also proposes that multiple roles lead to imbalance of involvement
as it becomes more difficult to perform each role successfully, due to conﬂicting demands on
time, lack of energy, or incompatible behaviors among roles (Greenhaus, & Beutell, 1985).
Regarding, involvement imbalances and its stress, conservation of resources theory also
explains stress outcomes for both inter-role stress, this model proposes that inter-role conﬂict
leads to stress because resources are lost in the process of juggling both work and family
roles (Wright, & Cropanzano, 1998) and increasing female representation in Nepalese
financial sector means that married women are juggling between their work and family roles
and eventually this inter-role conflict creates constant condition of involvement imbalances
for a married women.
2.2 Review of related literature

As a study succinctly mentions, the experience of work- family conflict for a married
women may include a simple everyday existential realities such as not being able to pick
up a child from daycare because of attending department meeting or not being able to go
to work because one’s children are sick (Cinamon, & Rich, 2005). Similarly, a study states
that time imbalance in work and family will make work-family conflicts arise if there is
disequilibrium between distribution of time in parenting, family responsibilities and working
in the organization (Vithanage, & Arachchige, 2017).
Moreover, in a study, Lakmal and Gahan (2019) based on identity theory, concluded that
crossover effects of work and family role imbalances were found to be more pronounced
for women than men. Moreover, in a study Edwards and Rothbard (2000) have linked
mechanisms between work and family and identified time as a finite resource, hence
spending time in one life domain would automatically result in diminished time available
to perform in another domain that subsequently results in constant time pressure. Recent
studies in North American (Chin et al., 2018) and European context (Gender Equality Index,
2019) also indicate that asymmetry continues to exist between genders when it comes to
sharing the burden of family responsibilities and family interference on work.
Similarly, Chincholkar and Krishna (2012) in a study on the work-family conflict among
the married working executives in Greater Mumbai argued that women employees were
acknowledging responsibilities than they would to deliver themselves in both domains and
the article concluded that women need to redefine role expectations for themselves and their
families. Similarly, in a study Hyman and Summers (2004) on financial sectors find that in
the United Kingdom both direct and indirect work intrusions into domestic responsibilities
of married employees.

111
Moreover, Jogulu and Wood (2011) in a study regarding married women and their career
progress as comparative study between Malaysia and Australia‘s middle managers indicate
that women in two countries studied still have significant responsibilities for performing
family duties, and bringing up children. In particular, the Malaysian respondents viewed
family and personal responsibilities as their greatest impediment to attaining senior
management positions. Besides, in a study, Valdez, and Gutek (1987) mention the career
progression of working women will be affected due to work-family conflict.
Considering Nepalese literature on work-life conflict, Adhikary (2018) found non-

significant, but positive correlation between work-family conflict and career satisfaction.
However, the sample size of study consisted of 69 percent males and 31 percent females,
whereas recent studies on work-family has recognized limitations of cross-sectional study
when asymmetry and inequalities still remains permeable within the work and family role
of a married woman (Gender Equality Index, 2019). Besides, in another study on barriers to
career progression, Adhikary (2016) indicated that among different societal-related barriers,
marriages during the prime of career significantly hampered the career development of
Nepali women employees. This study also examines the relations between antecedents and
outcomes of work–family conflict and its negative influence on career progress of married
women in Nepalese financial sector

Acknowledging gender difference, asymmetrically permeability of work and family
boundaries, and reciprocal as well as bidirectional nature of work-family conflict, this study
has formulated a conceptual framework to examine influence of involvement imbalances
time pressures and spill-over strains of work-family conflict on career progress of married
women in the context of Nepalese Financial Sector (Greenhaus, & Beutell, 1985;Edwards,
& Rothbard, 2003; Voydanoff, 2005; Vithanage, & Arachchige, 2017).Moreover, this study
has recognized bi-directional nature of the inter-role construct, therefore two distinct types
of work-to-family conflict and family-to-work conflict are included in the framework.

Figure 1 : Intersectional Relationship between antecedents and

consequence of work-family conflict
Socio-demographic Antecedents
factors:
Of Work Family conflict
Married, gender-role, (Involvement Misbalances,
family expectation, age, Time pressures, Spill-over
dual career couple, family, strains)
employees age of children
Outcome:
Negative impact on career progress
(Ambition Gaps, Work-family interface
challenges and Perceptual Bias)
Outcome:
Negative impact on career progress
(Ambition Gaps, Work-family interface
challenges and Perceptual Bias)
Based on the above conceptual framework this study was guided by the following research
questions:
RQ1. To what extent do these factors as antecedents of work-family conflict (involvement

misbalance, time pressures and spill-over strains) intersect with demographic factors and
negatively influence the career of married women in the context of Nepalese Financial
Sector?
RQ2. Are socio-demographic factors such gender-role, family expectation, age, dual career
couple, family and age of children contributing factors to antecedents of work-family conflict
and its subsequent outcome?

113
3. Research Design
In this study intersectional quantitative design has been used for this study and intersectional
approach to research indicates that different combinations can lead to different lived
experiences of individuals in comparison to other individuals who might share one or
more, but not all of the same elements (Christoffersen,2018). Methodological implications
of intersectionality include the experiences of those at an intersection of multiple cultural,
institutional and social positions that may not be accurately described by cross-sectional
studies. This research design allows for framing social category such as gender using
purposive sampling, to examine how measures demonstrate conceptual equivalence,
measurement invariance and multiple level of intersectional even within a particular group
(Else-Quest, & Hyde, 2016)
3.1 Participants and procedures

In this study, a purposive sampling method has been used to locate 90 married women
employees (N=90) of eight different commercial banks (n=60), two financial limited (n=10)
and four insurance companies (n=20) within Kathmandu Valley were research participants.
Data collection in this study involved a single-wave time-lag of six month and the data were
collected by female interns (research students of the researcher) in these institutions using
semi-structured questionnaires. Since, an intersectional approach to quantitative study is
an emergent paradigm; it is explorative, qualitative in orientation and in-depth in analysis,
besides it mainly focuses on revealing associations and differences (Christoffersen, 2018).
Although this study has used descriptive statistics (percentage and frequency) and inferential
statistics (chi-square, correlations and regression analysis) to analyze data and examine
relationships between different factors, data presentation is more oriented towards thick
description and in-depth study. In this study, Microsoft Excel, spreadsheet software with
Analysis ToolPak has been used for data analysis.
3.2 Instruments and measures

Regarding, survey instruments included 16 items (4 for each variable) related to work-
family conflict and career progress (Cronbach’s Alpha ranged from= .756 to .856),8 items
were for itemized scale (1 = Very Much to 4 = Very Little) question, 1 intersectional item
for demographic factors as mentioned in research question (Agree/Disagree, Yes/No) and
6 items were associated with demographic. For measurement of variables Likert scale with
1 = strongly agree and 5 = strongly disagree was used. However, for the purpose of result
reporting strongly agree and agree were combined together as agree and data from strongly
disagree and disagree were combined as disagree. Hence, reporting only entails three scale
items, agree, neutral and disagree. Furthermore, for developing survey instruments, regarding
variable measurement was based on existing literature that was also used for developing
conceptual framework.

4. Findings
4.1 Demographic information
Demographic data from the survey indicate that of 90 married women (N=90) sampled for
this study, 40% (n=36) of the respondent were under the age group of 30-40 age and 30%
(n=27) were under the age group of 20-30 age and rest (n=27) were in the age group of 40-50
and 50 above. Majority of research participants in this study have under-graduate or master's
degrees (80%, n=72) and 12% have master's in philosophy or doctoral degree (n=11) and
the rest 8% (n=7) have completed high-school. Again, among married women employees
approximately, 65% of respondents have management degrees and 25% have humanities
and social science degrees and 10% have computer related degrees. Approximately 50%
(n=45) have work experience in the financial sector for 5-10 years, 20% have less than 5 and
remaining 30% are into the category of 10-15 and above.
Table 1: Demographic Information

No. of Percentage
Respondents character
responses (Approximately)
Married Women (Employees in Financial Sector) N=90
Age (in year)
20-30 36 40%
30-40 27 30%
40-50 17 18%
50 above 10 12%
Total 90 100%
Education
High School 7 8%
Bachelors (Under graduate) 34 38%
Post-Graduate 38 42%
MPhil. or PHD 11 12%
Total 90 100%
Degree
Management 58 65%
Humanities and Social Sciences 23 25%
ICT( Computer Science) 9 10%
Total 90 100%

115
No. of Percentage
Respondents character
responses (Approximately)
Work Experience
Less than 5 years 18 20%
5-10 years 45 50%
10-15 years and above 27 30%
Total 90 100%
Organizational Hierarchy
Lower Level 9 10%
Middle Level 68 75%
Senior Management 13 15%
Total 90 100%
Dual Career Couples
Dual Career Couples 68 75%
Non-Dual Career Couples 22 25%
Total 90 100%
Family Structure
Nuclear Family 54 60%
Joint Family 36 40%
Total 90 100%
Number of Children
Without any Child 23 25%
1 Child 49 55%
2 or more that two children 18 20%
Total 90 100%
Of sample married employee (N=90) within organizational hierarchy 15% (n=13) are in
senior management position, approximately 75 % (n=68) on middle-level & lower level and
10% (n=9) in non-managerial position and this demographic data regarding organizational
position also exemplifies the findings of a discussion note published by IMF that has
identified large gaps between the representation of men and women in leadership positions
in banks and in banking-supervision agencies worldwide (Sahay, & Cihak, 2018). Similarly,
the study finds that approximately 75% (n=68) women employees are dual career couples
and in 65% (n=58) families both mom and dad work full time.
Regarding family structure, majority of respondents are part of nuclear family (60%, n=54)
and rest 40%, (n=36) belonged to joint family and concerning children, 55% (N=49) of
sample married women are with one child, 25 % of them are without any child and rest
20% have 2 or more than two children. Similarly, approximately 90 % (n=81) of married
women with children are using child-care centers and pre-school for their child under age

of 6 and the rest of them, 30% (n=24) are using in-home care. Besides, approximately 45%
(n=41) of respondents indicate that they have used child-care centers for their child within
6-15 months of age and majority of respondents, 70% (n=63) of them fall under the 30-40
age group.
4.2 Responses on perceived intersectional demographic factors

Similarly, regarding the question of the negative impact of work- family conflict on their
career progress, 80% (n=29) of married women in the age group of 30-40 indicate much or
very much, approximately 60% (n=17) of women in 20-30 age groups also indicate the same.
After all, combining these two age groups as earlier study also concludes, employees within
this life-stage are likely to be working longer hours and trying to define their professionalism
and considering their lifespan they are also more likely to start a family and have more
responsibilities such as having young children at home and this results into greater work-life
conflicts (Voydanoff, 2005).
Consequently, on the issue of gender differences, 78% (n=70) of participants have responded
in the range of very much and much that asymmetry still continues to exist between men
and women in work and family roles and being a woman contributes to their experience of
work-family conflict. In addition, regarding comparative rank question on influence of work
and family demands, 60% of participants (n=54) responded that expectation of family has
greater impact on their career progress than work and this finding relates with a study by
Choi (2008) that work and family demands cause life stress among Chinese employees and
the effect of family demands on life stress is mediated by work–family conflict.
Approximately 80% (n=72) of married women indicate very much or much regarding their
involvement in domestic responsibilities more than their husband. Similarly, regarding the
response on do you consider challenges of work-family interference have resulted into an
ambition gap regarding your career progress, approximately 70% (n=63), identify very much
and much. Here, comparable with findings of Chin et al., (2018), this study also explores
that the challenge of balancing work family conflict results in ambition gaps for a married
woman employee.
Table 2: Responses on Perceived Intersectional Demographic Factors

Responses No. of responses Percentage
(Approximately)
1. Negative impact of work- family conflict on career progress (Age Group Response)
20-30 Age Group (Much/Very Much) 29 (N=36) 80%
50 above (Much/Very Much) 2 (N=10) 20%
2. Gender differences and experience of asymmetry in Work and Family Roles

117
Responses No. of responses Percentage

(Approximately)
Very Much/Much 70 78%
Little/Very Little 20 22%
Total N=90 100%
3. Impact of Family Expectation on Career Progress
Greater Impact/Impact 54 60%
Lesser Impact/No Impact 36 40%
Total N=90 100%
4. Domestic Involvement Compared to Husband
More Involvement than Husband 72 80%
Equal or Less Involvement than Husband 18 20%
Total N=90 100%
5. Do you think gender marital status, dual career spouse and age of your child have contributed
to your experiences of work family conflict? (Intersectional demographic Variables)
Disagree 20 22%
Agree 70 78%
Total N=90 100%
6. Restriction of Work Family Conflict on Career Progress
Yes 68 75%
No 22 25%
Total N=90 100%
Moreover, when it comes to intersectional influence between demographic factors such

gender, dual career spouse and age of child (do you think your gender marital status, dual
career spouse and age of your child has contributed to your experiences of work family
conflict) as contributing factors to antecedents of work-family conflict ,approximately 78%
(n=70) of respondents agree that demographic factors as contributing factors to antecedents
of work-family conflict and its subsequent outcomes. Besides, approximately 75% (n=68)
agree that work-family conflict can potentially restrict their career progress after all women
are more involved in family activities while at the same time also accumulating their
professional work (Greenhaus, & Powell, 2012).


Table 3: Correlation Statistics of Intersectional Demographic factors with Work-
family conflict & its subsequent impact on career progress
Socio-demographic Variables Work-family conflict & its subsequent
(N=90) impact on career progress
Gender Difference Pearson Correlation 0.78*
Sig. (2-tailed) 0.025
N 90
Dual career couple Pearson Correlation 0.72*
N 90
Pearson Correlation 0.12
Age of youngest children
N 90
Family expectations Pearson Correlation 0.67*
N 90
* Correlation is significant at the .05 level (2-tailed) (Note: Perceptions on

Demographic factors and Work-family conflict (itemized Scale 1 = very much to 4 =
very little),
Similarly, Person's correlation also indicates a positive relation (r=0.78, P=0.025) between
negative impact of work-family conflict on career progress (Do you think work-family
conflict negatively influences your career progress) and gender difference (Do you think
your gender roles influence your experience of work-family conflict). Similarly there is a
positive and significant relationship between being a dual career couple (r=0.72, P=0.020),
regarding age of youngest child (r=0.12, P=0.44) there is statistically insignificant and weak
positive correlation. Likewise, regarding child and parent role, a study found that women
find their child as central to their identity and give more importance to parental role (Gaunt
& Scott, 2017). Hence, married women find it difficult to consider the age of their child as a
burden. Regarding family expectations, this factor has a positive and significant relationship
with work family conflict (r=0.67, P=0.032).
4.4 Chi-Square analysis of variations in work family

In this study to investigate differences of response regarding work-family conflict based on
age-group differences chi-square analysis has been conducted. Pearson chi-square results
indicate that there is significant difference in responses of participants based on their age

119
group. Regarding age, approximately 80% (n=29) of women in the age range of 30-40
age group and 60% (n=20-30) indicate their current age group as an important factor that
influences their work family conflict and also their concerns about career progress. Therefore,
this study has evaluated a statistically significant degree of difference among demographic
factors (age) and its association with work-family conflict. After all, a study indicates that
the relationship between gender and work-life conflict is significantly moderated by age
(Cloninger et al., 2015).
Table-4: Chi-Square Analysis of variations in Work family conflict among married

women based on their age group
Variable Age group (N=90)
P-value
Prevalence of Work-Family -20-30 (60 %- Very Much/Much)
conflict and its subsequent -30-40 (80%-Very Much/Much) -40-50 3.45 0.035*
Influence (57%- Very Much/Much)
-50 and Above (34% Very Much/Much)
N= number of participants, P value significant at 0.05 (2-tailed)

Moreover, similar to the chi-square analysis in this study, other studies also indicate that
younger married employees experience distress as a result of interference between work
and family involvement and the employees in middle adulthood experience highest levels of
interference (Bellavia, & Frone, 2005). Likewise, in a study Huffman et al. (2013) indicate
that relationship between family conflict and age is curvilinear in nature; their study finds
that work–family conflict was lowest for younger and older workers, and highest for workers
in the middle age group.
4.5 Regression Analysis for predicting work-life conflict career progress

Table 5 : Regression Analysis for predicting work-life conflict and its negative impact
on career progress of married woman
Unstandardized Standardized
Model Coefficients Coefficients t value Sig.
Beta Std. Error Beta
1 (Constant) 2.89 .136 5.15 .010*
Involvement 0.260 .049 0.289 8.73 .0234*
imbalances
Time Pressures 0.343 .067 0.369 2.45 .023*
Spill-Over Strains 0.173 .069 0.181 3.53 .011*
*.Significant at the 0.05 level, R2 = 0.68, F = 33.032, p < .05 β = Standardized Regression
Coefficient, * p <.05

The results of regression analysis indicates significant predictive of gains in work-life

conflict due to involvement imbalances time pressures and spill-over strain = .68, and
adj =.61, F=33.32, p =.020. Therefore, this model predicts 68% variation in antecedents
of work family conflict increases barriers to career progress among married women in
Nepalese financial sector. In this model all variables were included in the equation including
career progress and work-life conflict. As the analysis predicts these antecedents of work
family conflict negatively spills over as a barrier for career progress of married women.
Since standardized βs are positive, based on regression analysis this study indicates that 1
percent enhance in involvement imbalances, time pressures and spill-over strains, normally,
and has the positive relationship influence of a rising work-family conflict that results in
hindrance for the career progress of a married woman. Regression analysis of this study
confirms the model of Greenhaus and Beutell (1985), which recognizes time, strain and
involvement imbalances as sources of work-family conflict.
As comparable to findings, another study has also indicated that as the employed mother
is experiencing time pressures in work and family roles then the motivation to advance her
career diminish (Bartolome & Evans, 1979). Regarding involvement imbalances and its
stress, conservation of resources theory also explains stress outcomes of inter-role imbalances
results in a negative state of being (Grandey, & Cropanzano, 1999) that culminate into lack
of interest in career development.
5. Discussions
In this study, descriptive and inferential results indicate an intersectional relationship
between different socio-demographic factors such gender-role, family expectation, age, dual
career couple and age of children and work-family, and the result of descriptive, correlation
and chi-square analysis are comparable with studies that have been conducted in South
Asian Context (Jain & Nair, 2016; Rajadhyaksha, & Velgach 2009; Buddhapriya, 2009) and
consistent with other studies that have considered moderating role of socio-demographic
factors on work-family conflict (Pleck, 1977; Byron, 2005).
In a study related to examining antecedents of work-life conflict Byron (2005) mentioned

that demographic variables, such as gender and marital status are predictors of work-
family conflict work-family conflict. Similarly, comparable with the findings of this study,
Buddhapriya (2009) indicated family responsibilities of married women negatively affect
their career advancement to senior positions, as they experience career tradeoffs and
imbalances of involvement between professional roles because of the family responsibilities.
Descriptive analysis of the study indicates that among sample married women within
organizational hierarchy 15% are in senior management position and this find is
comparable to a study by Chin et al. (2018) research shows that women remain significantly
underrepresented in the upper levels of financial-services companies and even in Northern
American Context, women account for only 19 % of leadership positions. Hence, despite

121
this growth of employment opportunities for women in Nepalese financial sector, regarding
leadership, senior managerial and senior professional roles, gender disparity remains
extremely high (Ross-Smith, & McGraw, 2010).
Moreover, this study finds that career decisions of married women employee, predominantly
guided by the demands of family care and they experience negative spill-over effects of
work-family conflict on their career. And, this asymmetric remains consistent even in this
study and also comparable to findings by Abeysekera and Gahan (2019) that the impact of
crossover effects of work-family conflicts was found to be more pronounced for women.
Besides, as socio-demographic variables associated with family domain and presence of
antecedents of work-family conflict in both professional and family role of a married woman
indicate that ambition gap persists even among married women employee because of their
inability to balance family and due to this major reason they are not pursuing top executive
roles (Chin et al., 2018). After all, based on the findings of inferential statistics, this study
also concludes that an employee experiencing strains of work family conflict is less likely to
participate or take initiatives for career development (Higgins et al., 1992)
More importantly, Hoobler et al. (2009) consider work-family conflict as a main hurdle for
career progress of a married women employee since top-level management perceives women
having greater family-work conflict and therefore view them as mismatched for leadership
roles in an organization. And, due to asymmetrical involvement in both work and family
domains, there is a tendency among top-level managers to perceive women employees as
experiencing greater family-work conflict. Therefore, mismatched for career advancements
and leadership fits within the working style of the financial sector that recognizes long
hours as organizational commitment, besides it is difficult for married women to balance
the conflicts arising from work and family spheres (Lockwood, 2003). After all, this study
also indicates that balancing work and family conflict is both experientially and existentially
difficult for employed married women.
6. Conclusion and Recommendations

Taking findings and discussions into consideration, this study concludes that married
women are experiencing work-family conflict that has a negative influence on their career
development. As Sustainable Development Goal-5 also argues for inclusive policies
concerning greater gender equality when it comes to career progress of female employee,
this study also indicates that work-family concept still remains as a challenge, due to
gendered division of work and family responsibilities and asymmetrically permeable family
and work roles prevalent among Nepalese married women and these realities have habitually
culminate into negative stereotypes, perceptual bias and subsequent glass ceiling.
Moreover, this study recommends a need for sustainable corporate culture and human resource
practices which acknowledges diversity, family supportive cultures, and gender issues and
assimilates complex and conflicting necessities of both work and family. Besides, this study

recommends organizations to realize that work and family are interrelated domains, and
strains experienced in each domains have a mutual impact on another (Kalliath et al.,2012).
More importantly, gender inequalities in work–family balance decreases opportunities for
career progress among married woman (Sullivan, 2019)
This article also recommends that organizations need to introduce family-friendly policies,
flexible work arrangements, compressed workweek plans and cultivate a family-supportive
organizational culture to ensure that married women employees have the necessary family
supportive programs. Besides, organizations need supportive resources for those employees
who are most in need for balancing work-family interfaces (Mansour, & Tremblay,
2018). And, to reduce stress associated with work-family conflict, it is also necessary
for organizations to incorporate policies that facilitate work–family enrichment (Jain, &
Nair, 2020). Besides, it is necessary for organizations to develop systematic and robust
organization-based approach to provide solution for work-family conflict within financial
institutions especially for married female employees (Ajayi et al., 2020)
Moreover, recent study indicates that clarifying priorities between work and family roles
may result into lesser work family conflict (Erdogan et al., 2019) Therefore, concerning
married women, this study recommends them to become better with role segmentation,
seek colleague support, negotiate for flexible work arrangements, have enough courage to
overcome social criticisms and disapprovals, cultivate highly impermeable and inflexibly
role boundaries between work and family domain.

123
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Empowerment of Women through
Entrepreneurship Development in Emerging
Economies: A Case of India
Siby Abraham1 Himachalam Dasaraju2 Jency Treesa3
sibyabraham@shcollege.ac.in
Abstract
The present paper purports to overview women empowerment through women

entrepreneurship development in emerging economies. Women empowerment through
entrepreneurship has assumed greater importance to push forward the economic development
of developing countries across the world. The development of a sound entrepreneurship
culture is an index of the empowerment of people, industrial development, and the overall
economic prosperity of any country. Women entrepreneurship has become a very important
driver of women empowerment and sustainable economic progress. The paper reviews
women empowerment, female entrepreneurship, gender equity, institutional support and
problems of women in rural areas. It also suggests practical solutions to surmount the
problems confronted by the women. The physical, material and technical supports have
to be extended to the women entrepreneurs to get success and empower themselves. An
imperative need is to promote and encourage women to take part and exhibit their mite
in the central stream of economic activities and thereby promote economic growth and
sustainable development. It provides further insights on the relationship between women
empowerment and entrepreneurship and needs to focus special attention on promoting
women empowerment as a part of UN sustainable development goals.
Keywords: Women empowerment, Women entrepreneurship, Gender equity, Inclusive

growth, Sustainable development goals.
1. Introduction
1.1 Background
The concept of women empowerment and entrepreneurship development have assumed
greater relevance in developed as well as developing nations across the world. The
development of entrepreneurship, which is a human activity, has become imperative in
the economic development and prosperity of any country. The success of an economy
1. Siby Abraham, PhD is an assistant Professor, Department of Economics, Sacred Heart College
(Autonomous), Kochi, Kerala, India.
2. Prof. Himachalam Dasaraju is a Senior Fellow & Professor Emeritus (former), Commonwealth Visiting
Fellow, UK. He has served at Sri Venkateswara University, Tirupati, Andra Pradesh, India.
3. Jency Treesa, PhD is an Assistant Professor, Department of Commerce, St. Teresa’s College (Autonomous),
Kochi, Kerala, India.

127
Empowerment of Women through Entrepreneurship Development in Emerging Economies: A Case of India
undisputedly depends on its entrepreneurial quality, skills, competence, and performance

of the industrial sector. For the developing countries, it is an urgent need to find, nourish
and develop competent women entrepreneurship for strengthening women empowerment.
Economic empowerment is a sine qua non for elevating women's status in every developing
economy. Women in emerging economies in general and India, in particular, are deprived of
many socio-economic benefits and status in society. They are relegated in multiple ways in
the society though they constitute a considerable proportion of the total population.
According to the World Bank, empowerment means "the process of increasing the capacity
of individuals or groups to make choices and to transform those choices into desired actions
and outcomes”. The core of this process is actions which build both individual and collective
assets and improve the efficiency and fairness of the organizational and institutional context
which govern the use of these assets (UN, 2012). The empowerment is multidimensional
encompassing the extension of freedom of choice and action in social, economic, and political
spheres thereby upholding one's life with adequate control over resources and decisions.
Women's freedom is often restricted due to the inherent gender inequality prevailing in
homes and society. For the empowerment, women require a lot of assets and capabilities
at the individual level to transform the untapped assets into products or services. The right
approach towards achieving this end could be through entrepreneurship development among
women. The entrepreneurial spirit with good education is one of the most important means of
empowering women with the knowledge, skills, and self-confidence necessary to participate
fully in the development process of any economy (UNFPA Report, 1995).

The specific objectives of the study are:
(a) To examine the problem of gender gap and the empowerment of women through
entrepreneurship.
(b) To discuss the policy measures undertaken by the Government of India to promote
women entrepreneurship.
(c) To study the constraints and barriers to women entrepreneurship in India and suggest
measures to tackle the problems of women entrepreneurs.
The study aims firstly, to examine the problem of gender gap existing in India and the policy
measures taken by the Government of India to promote women entrepreneurship. Content
analysis was used for analyzing the textual material required for this. In this approach building
a coding frame is central (Schreier, 2012). Extensive literature review was done to gather
published data and the based on the research objectives data was coded based on the theme
of women entrepreneurship and policy measures taken to promote women entrepreneurship.
To know the problem of women entrepreneurs, one to one expert interview was conducted
among 6 women entrepreneurs. Meuser and Nagel (2009) discuss the expert interviews as a

specific form of applying semi- structured interviews. The problems of women entrepreneurs
enlisted in the latter part of the paper is the experts’ subjective orientations, points of view
and interpretations.
There is a growing body of literature that recognizes women empowerment as a solution for
bridging the gender equality. The literature review is based on themes as Women empowerment
and gender equity, Women's Empowerment: Global Scenario, Women Empowerment:
Indian Scenario, Women Entrepreneurship as a Means of Women Empowerment, Women’s
Entrepreneurship - present need, scope of women entrepreneur, and Institutional Support for
Women Entrepreneurship in India.
Women entrepreneurship is defined as self-employment or the creation of a business where

the total or majority of the ownership and the decision-making processes are owned and
managed by women respectively (Carter & Shaw, 2006).
3.1 Women empowerment and gender equity

Women's empowerment is a critical aspect of achieving gender equality. Gender equality
is a human right, but the entire world faces a persistent gap in access to resources and
opportunities and decision-making power for women and men. Gender equality is a
fundamental human right, and it's a necessary foundation for a healthy, peaceful, prosperous,
and sustainable world. Women are deprived of opportunities than men in fulfilling basic
needs, higher education, health, safety, economic participation and political representation.
Protecting the rights of women and giving them equal opportunities promises gender
equality and also ensures the attainment of international development goals. Empowered
women increase the quality of health and productivity of their families, communities, and
countries, creating a ripple effect that benefits everyone. Women's empowerment and gender
equality ensure progress in all areas and was one of the eight-millennium goals envisioned by
the world leaders at the Millennium Summit held in New York in 2000.
The Gender-related Development Index (GDI) and the Gender Empowerment Measure
(GEM) were introduced in 1995 in the Human Development Report of the UNDP with
the prime aim of the measures were to add a gender-sensitive dimension to the Human
Development Index (HDI). It is high time to presume that every woman should be self-
reliant, self-sufficient, healthy, resilient, respected, courageous, strong, equal treatment, and
heard. For strengthening this movement every year on the 8th of March observed globally
the International Women's Day to review the progress and propose the action plan to achieve
the target. International Women's Day was organized globally on March 8, 2021, and debated
on the main theme "Choose to Challenge". Further, the celebrations focused on the review
of the achievements of women and calls for action to empower women to create a gender-
equal world.

129
Empowerment of women and minimizing the gender gaps in the world of work will in
general help to achieve the 2030 Agenda for Sustainable Development and particularly
achieve the Sustainable Development Goals: Goal 1 on ending poverty, Goal 2 on food
security, Goal 3 on ensuring health, Goal 5 to achieve gender equality, Goal 8 to promote
full and productive employment and decent work for all; and also Goal 10 on reducing
inequalities (UN-SDGs, 2020).
3.2 Women's empowerment: Global scenario

Prior studies have confirmed the theory of “push” and “pull” factors when it comes to the
motivations of business leaders (Orhan & Scott, 2001; Sarri & Trihopoulou, 2005). Several
lines of evidence suggest that women in developing countries are generally “pushed”
toward entrepreneurship through factors such as economic hardship and state initiatives,
whereas women in developed countries are more likely to be “pulled” into entrepreneurial
activity through the pursuit of achievement, autonomy, and self-fulfillment (Malach-Pines
et al., 2010).A report of the United Nations says that "Women constitute half of the world
population, perform nearly two-thirds of work hours, receive one-tenth of the world's
income and own less than one-hundredth per cent of the world's property." Women are still
suffering from discrimination, exploitation, and victimization across the world; hence, the
need of the hour is the empowerment of women in all categories – social, political, and
economic. Keeping pace with all these tasks to empower the women through education,
gender budgeting, and all those rights which are necessary for women to sustain their life in
a suitable and appropriate environment, women entrepreneurship is another way to empower
them. In the process of industrialization and globalization, mass education, and a sense of
right of equality in economic activity, women are putting their steps in the entrepreneurial
world. They have to perform multifaceted roles in society along with their professional life.
A recent study in the United States indicated that 1 out of every 11 adult women is an
entrepreneur. Women business owners generated overall employment of 18 million workers
and earned from $2 to $3 trillion in U.S. economy revenues. Women substantially contribute
towards economic development and their contribution in the development process has
been continually increasing all over the world. The steep rise in the number of female
entrepreneurs can be attributed to many reasons like passion to pursue their ideas, the desire
to become self-employed, and the urge to address philanthropic causes and this is at par with
the rationale of their male counterparts. It is a truth that the women in almost all the known
societies of the world have not enjoyed the same status, privileges, rights, and powers as men
(Mayoux, L, 2000).
According to Human Development in South Asia Report (2000), Women's Empowerment

is a change in the context of a woman's life, which enables her to increase her capacity for
leading a successful human life. Women's empowerment is one of the essential factors that
promote human development. The Programme of Action of the International Conference
on Population and Development envisages that the empowering and ensuring autonomy
of women thereby improving their political, social, economic, and health status are highly

relevant and important for sustainable human development (UNFPA, 2007). The concept of
human development has evolved out as a broader measure of the socio-economic progress
of the nation. Human development is measured in the form of a composite index called the
Human Development Index (HDI). In 1995, the Human Development Report put forward the
concept of Gender-related Development Index (GDI) and Gender Empowerment Measure
(GEM). GDI, while measuring the achievements in the same dimensions and variables as
the HDI, also incorporates inequality in achievement between women and men (Anand et.
al, 1995).
Women's Empowerment is a buzzword worldwide, as the global decisions of various countries

as a part of global partnership for development, centering on population development, more
so on women empowerment. The task of promoting women's empowerment is included
in the Millennium Development Goals and International Conference on Population and
Development (ICPD) Programme of Action (Principle-4). The ICPD Programme of Action
referred to the Cairo Consensus which was remarkable in its recognition that reproductive
health and rights, as well as women's empowerment and gender equality, are cornerstones of
population and development programs worldwide. The United Nations Fund for Population
Activities (UNFPA) partners with governments, other agencies and civil society to advance
UNFPA's mission. Two frameworks guide its efforts, viz., the Programme of Action adopted
at the 1994 International Conference on Population and Development and the Millennium
Development Goals which target to reduce extreme poverty by the end of 2015 (www.unfpa.
org).
The world population increased from 3.6 billion to 7 billion between 1970 and 2011.
As that population becomes more educated, its growth rate will slow down. The Human
Development Report of 1995 focused on gender inequality in the development process of
various countries. It highlighted the fact that among 900 million illiterates in the developing
world, women outnumbered men. Among the 1.3 billion people in poverty, 70 per cent were
women. But the invisible non- monitored contribution of women to the world output was
a staggering $ 11 trillion per annum i.e., nearly 50 per cent of the official estimated world
output of $ 22 trillion. The report also said that women's position was unenviable in all
countries and in all respects. Even in administrative and managerial careers, women were far
behind. In India in 1992, women accounted for 2.3 per cent of employed in the carder and
the rest were occupied by men.
The Gender-related Development Index (GDI) and the Gender Empowerment Measure
(GEM) were introduced in 1995 in the Human Development Report of the UNDP to add
these measurements of gender-sensitive dimensions to the Human Development Index
(HDI).

131
Figure 1: Global Gender Gap Index
Source: World Economic Forum (WEF)-Global Gender Gap Index, 2021.
It is observed from the above diagram of the Global Gender Gap Index 2021 of WEF, that
India ranked 140 globally out of 156 countries, and 62.5 per cent of the gender gap in the
gender parity in South Asia. India is ranked as 140 (slipped 28 places) among 156 countries,
as per the Global Gender Gap Report 2021, by World Economic Forum. In 2020, India was
at 112th position among 153 countries. Iceland remains the topper as the most gender-equal
country in the world for the twelfth time.
Figure 2: South Asia's Global / Regional-wise Gender Gap Index, 2021
Source: World Economic Forum (WEF)- Global Gender Gap Index 2021.

Table:1 The Global Gender Gap Index rankings in South Asia, 2021
Country Rank Score

Regional Global
Bangladesh 1 65 0.719
Nepal 2 106 0.683
Sri Lanka 3 116 0.670
Maldives 4 128 0.642
Bhutan 5 130 0.639
India 6 140 0.625
Pakistan 7 153 0.556
Afghanistan 8 156 0.444
Source: Global Gender Gap Report, 2021
According to the report of the South Asia's Global/Regional-wise Gender Gap Index, 2021,
India got 6th regional rank and 140th global rank as mentioned earlier, as detailed in Table
no.1.
Figure 3 : Country-wise Human Development Index Rank, 2019

133
Table 2: Country-wise Human Development Index Rank, 2019
Country HDI Rank (2019) Change from 2018

Russia 52 -3
Sri Lanka 72 1
Brazil 84 0
China 85 2
South Africa 114 1
India 131 -2
Bangladesh 133 1
Nepal 142 1
Pakisthan 154 0
Interestingly, India dropped a place in the overall Human Development Index (HDI) ranking
though improved in its absolute value of HDI to 0.645 in 2019 from 0.642 in 2018, a change
of -2 from 2018. We have miles to go to reach the considerable global HDI, followed by
Bangladesh and Nepal. India dropped a place in the overall Human Development Global
Gender Gap Report which is annually published by the World Economic Forum (WEF). It
benchmarks countries on their progress towards gender parity in four dimensions: Economic
participation and opportunity, educational attainment, health and survival, and political
empowerment (WEF, 2021).
Table 3 : India's profile in world gender gap: Score comparison in 2006

and 2021
2006 2021
Index / Factors
Score Rank Score Rank
Global Gender Gap Index 0.601 98 0.625 140
Economic participation and opportunity 0.397 110 0.326 151
Educational attainment 0.819 102 0.962 114
Health and survival 0.962 103 0.937 155
Political empowerment 0.227 20 0.276 51
Table no.3 presents the score comparison of India’s profile in world gender gap in 2006 and
2021. It can be observed from the table that the global gender gap index score rose from
0.601 in 2006 to 0.625 in 2021 and the rank rose from 98 in 2006 to 140 in 2021. It indicates
that the global rank slipped 42 ranks from 2006 to 2021. Likewise, all other factors like
economic participation and opportunity, educational attainment, health and survival, and
political empowerment also declined from 2006 to 2021.

Gender equality apart from being a fundamental right is a necessity for a peaceful and
sustainable world. When compared to the past decades we see positive changes with regard
to gender equality. The enrolment of girls in the schools increased, fewer girls are forced
into early marriages and more women take up leadership roles. Covid-19 is said to have
reversed the limited progress that has been made on gender equality and women's rights.
Disproportionate role is assigned to women in responding to the virus, including as frontline
healthcare workers and caretakers at home. The unpaid job of women at home increased
many folds during lock down times, especially due to the school closures and the increased
need of care for elderly people.
3.3 Women empowerment: Indian scenario

Economic empowerment is a sine qua non for enhancing the status of women in the society in
any developing economy like India as Indian women are deprived of many socio-economic
benefits and status in the society. They are backward in many ways in the society though they
constitute considerably in the total population. As per the 2001 census, women constituted
about 48 per cent of the total population of the country. In India, women head only 10 per cent
of the total household, and the ownership of land and other assets are mainly in the name of
the men of the family. Moreover, women in the economically active age group 15-59 years
constitute 58.4 per cent of the total women population. For empowering women, this needs
to be targeted because if a woman is economically empowered it becomes much easier for
her to become socially empowered. These women need to take part actively in education/
training, employment, income generation, and developmental process. The situation is so
worst in the case of women in backward areas. Keeping in view the plight of Indian women
particularly, the government of India has been taking a lot of measures to improve the living
standards and social status of the women. Accordingly, a plethora of programs for uplifting
the status of women in society is taken up over some time.
The government of India has given importance to the development of women since the
Planning era. But only in the Sixth Five Year Plan the focus of the government changed
from women welfare to the development of women. The Eighth Plan set vigil to ensure
that benefits of development from different sectors do not negatively affect women. The
Rashtriya Mahila Kosh was set up in 1993 to meet the credit needs of poor women. The
Ninth Plan was remarkable as it envisaged "empowerment of women" and “Convergence of
existing services" available in both women-specific and women-related sectors. The Tenth
Plan (2002-07) planned at "empowering women as the agent of socio-economic change and
development". In tune with the recommendation of the National Policy for Empowerment of
Women, the Tenth Plan put forward a three-fold strategy for empowering women, through
social empowerment, economic empowerment, and gender justice.
The socio-cultural pattern of the Indian society is largely based on the Hindu Caste system
in which class, caste, ethnicity, and gender largely determine the socio-economic status of
various populations. Moreover, Indian society is a patriarchal society with masculinity as
one of the characteristics in most of the families of the society which influence all aspects of
the social, cultural, and economic life of the people (Oliver D'Souza, 2011).

135
Women's Economic Empowerment (WEE) has important linkages with gender equality.
For attaining gender equality, India has formulated several schemes and legislations that
aim to empower women and enhance their participation in the economy. Unfortunately,
these initiatives have had only limited success. According to the WEF 2021 report, India
has slipped on the political empowerment index as well by 13.5 percentage points, and a
decline in the number of women ministers, from 23.1 per cent in 2019 to 9.1 per cent in
2021.But it still scored relatively well compared to other countries, ranking at 51 in women's
participation in politics. In the index of education attainment, India has been ranked at 114.
The WEF's Global Gender Gap Report 2021, indicates the following in the Indian context
(WEF, 2021).
1. India ranked 140 among 150 countries in the overall global rankings. It is noticed that
India has fallen 28 places in the overall ranking globally.
2. In South Asia, India lagging behind the neighboring countries like Bangladesh, Nepal,
Bhutan, Sri Lanka, and Myanmar.
3. India’s position in the political empowerment index decreased by 13.5 percentage
points.
4. India has ranked 114th in the index of education attainment.
5. India has fared badly in Health and Survival, which includes sex ratio and economic
participation in national and regional economic activity.
6. In India, the estimated earned income of women is only one-fifth of men's, which puts
the country among the bottom 10 globally on this indicator.
In India the proportion of women in senior and managerial positions remains very low; only
14.6 percent of these positions are held by women and there are only 8.9 percent of firms
with female top-level managers. Further, the estimated earned income of women in India is
only one-fifth of that of men, which puts the country among the bottom ten globally on this
indicator, it said. Discrimination against women is also reflected in the health and survival
sub-index statistics. With 93.7 percent of this gap closed to date, India ranks among the
bottom five countries in this sub-index. Wide gaps in sex ratio at birth are due to the high
incidence of gender-based sex-selective practices. In addition, more than one in four women
has faced intimate violence in her lifetime, as explained in the report. "Conversely, 96.2%
of the educational attainment sub-index gender gap has been closed, with parity achieved in
primary, secondary and tertiary education. Yet, gender gaps persist in terms of literacy: one-
third of women are illiterate (34.2%) compared to 17.6% of men," the report added (Global
Gender Gap Index 2021).
The extent of gender inequality is evident from the high incidence of violence against
women, including violence at homes. Studies reveal that over one-third of adult women in
India have experienced sexual or physical violence. Domestic violence is one of the most
common forms of cruelty faced by women. These high levels of tolerance for domestic
violence reveals the need for increased efforts to raise awareness of women's rights and the
law among both women and men and community leaders (ADB, 2013).

3.4 Women entrepreneurship as a means of women empowerment

Entrepreneurship always depends on the entrepreneurial talent and efficiency and it is a
notable development indicator from a socio-economic point of view. It has emerged as a
new major force for economic change and women, along with men have to be encouraged
to take part so that women empowerment and economic development can be attained
together. Entrepreneurship requires the ability to take the risk and coordinate the factors of
production efficiently in an uncertain environment. Generally, women can work hard with
a lot of commitment and dedication and their entrepreneurial qualities make a considerable
influence on the success and failure of organizations. This has been widely recognized by
the planners and they often emphasize moulding talented women as entrepreneurs who can
transform the destiny of our nation with their business involvement.
The Government of India has defined women entrepreneurship as an enterprise owned and
operated by women with a minimum of 51 per cent financial interest and women employees.
Women entrepreneurs can perform the same tasks and responsibilities as their male
counterparts. They need to explore the prospects of starting a new enterprise; undertake risks,
introduce innovations, coordinate administration, control business, and provide effective
leadership in all aspects of the business (Frankel, FR, 1997). Women should be encouraged
to free themselves from the shackles of conservative traditional customs, which confine
them mostly to household activities. Because of their capacity for hard work, commitment,
and sense of responsibility they should be properly motivated and their talents and abilities
have to be nurtured. In the small-scale industrial sector, there is considerable scope for their
gainful employment and they can improve their standard of living, their own as well as that
of people in general. But as the situation now prevails, there is no perceptible improvement
in women entrepreneurship. It is most unfortunate because, in India’s population, women are
on par with men. But their participation in economic activity and share of income in the total
resources of the country are pitiably very low.
In India, the ownership and management of business and industry has long been considered
a male prerogative. It is important to note that as per the Planning Commission estimates,
the total requirement of employment during 1990-95 would be about 65 million and during
the decade 1995-2005, it would be 105 million, of which the major employment seekers
would be from rural areas. Therefore, it is necessary to develop small-scale industrial
units in areas where there is chronic unemployment, dearth of capital, lack of appropriate
technical know-how, and certain inherent structural imbalances in the economy. Because
this sector has a high potential for the generation of employment, the scope for dispersal
of industrial units, narrowing down regional imbalances, utilization of hitherto untapped
locally available resources, and for the promotion of entrepreneurship among women.
Towards this end, the Government of India has taken several measures in the area of
finance and managerial assistance for the promotion of women's enterprises. Despite these
measures, the small-scale units are still plagued by a series of problems. The crux of the
problem is that women entrepreneurs are found lacking in initiative, motivation, innovation,
and the spirit of encountering risks which are closely associated with all business operations

137
whether of women or men. Male domination encouraged by the long-established tradition

of patriarchy practice has almost conditioned most of the women to a life of obedience,
submissiveness, silent suffering, self-denial, and scarify as if these are great and inviolable
virtues in themselves that all women should emulate. As a consonance, women’s direct,
active and dynamic participation in the economy and their contribution to its development
have been grossly reduced and confined.
3.5 Women’s entrepreneurship - A present need

Father of the Nation Mahatma Gandhi asserted rightly: “My greatest hope is women. They
want a helping hand to help them out of the well in which they had been kept. They made
record contribution during Satyagraha of 1931-32, they are waiting to be organized”. He also
said: “woman is the companion of the man gifted with equal mental capacities. She has the
right to participate in all walks of life along with men. She has the same right to freedom
and liberty as a man. She is entitled to a supreme place in her sphere of activity as man is.
By sheer course of vicious customs, even the most ignorant and worthless men have been
enjoying superiority over women for whom they do not deserve and ought not to have”. In
India and other developing countries, the ownership and management of businesses and
industry have long been male prerogatives. This situation, fortunately, is changing gradually
and in recent years women have begun to be aware of their potentials and their rights to
participate in various economic activities including the fields of industry, service sector, and
business. Educated women in cities are making their way into non-conventional fields such
as consultancy, marketing, advertising, export of garments, interior decoration, handicrafts,
dyeing and printing, food processing, Biotechnology, IT, etc. There is hardly a field in which
they are not making their mark today.
The emergence of women entrepreneurs in India has increased over the years and it has
significantly grown after the economic reforms in the 1990s. According to the Bain &
Company report on women entrepreneurship, India has 13.5-15.7 million women-owned
enterprises, representing 20 per cent of all the enterprises. Most of them are managed and
operated by a single person but provide direct employment for an estimated 22-27 million
people. Even though the numbers show a sudden spurt in women entrepreneurship, a sizeable
number of these enterprises are run by male counterparts and the ownership of women remain
only in papers. The virtue of women entrepreneurship has not been accepted in the traditional
Indian social setup and ignored its potential as a game-changer in women empowerment in
the country. However, the urban population has acknowledged the capability of women and
entrusted them with greater responsibilities in the corporate world.
The Government of India has undertaken several programs wherein entrepreneurs are trained
on all, technical, managerial and other related skills so that they may enter the industrial field
confidently with risk-bearing capacity and manage their units on scientific lines. In this
context, it is important to recognize that in entrepreneurship development equal importance
has to be given to potential and prospective women entrepreneurs. Given the important
role women can play in the industrial scene, the Government of India is encouraging them

and trying to bring them into the fold of industrial activity. But it seems that women have
not responded as favourably as expected. Probably the customs and tradition are generally
against their assuming new roles, which are mistakenly regarded as roles of men.
Unemployment in rural areas has been on the increase and migration from rural to urban
in search of livelihood has become a greater and vexing problem. An estimate by the
Planning Commission placed employment backlog at about 28 million by the beginning of
Eight Plans. And their number is sure to have increased perceptibly since then. Among the
countless employment seekers, a major portion is from rural areas. Therefore, it is necessary
to develop small-scale industrial units in areas where there is chronic unemployment, dearth
of capital, lack of appropriate technical know-how, and certain inherent structural imbalances
and bottlenecks in the economy. As the small sector has a high potential for employment
generation, there is plenty of scope for the dispersal of industrial units over a wide area
so that regional imbalances are narrowed down, untapped local resources are utilized and
also entrepreneurship among women could be promoted in the process. Towards this, the
government of India has tried to provide financial and managerial assistance.
In India, a very substantial portion of women are unemployed though they can undertake
varied activities including industrial activity. Therefore, it is essential to expose them to the
various employment profit generating avenues and promote and develop entrepreneurship
among them. And it is a fact that in some parts of our country, some women have established
beyond any doubt, their competence as successful entrepreneurs. But unfortunately, this
development has taken place in cities only. And the rural women are still caught in the
targeted levels of poverty, restricting social traditions, customs, and prejudices. Hence, it is
quite necessary to emancipate them and bring them into the fold of entrepreneurship.
3.6 Scope of women’s entrepreneurship

Women can venture into any area of business industry and the service sector depending on
their interest, inclination, and aptitude depends upon their educational background, family
social status, income level, nature of training if they have had any technical knowledge,
entrepreneurial background, and so on. Women can venture into these and other activities
by getting trained in those fields and the related areas. The government and allied agencies
have been providing training facilities through various Entrepreneurship Development
Programmers (EDPs). Financial institutions are also directed to purvey financial and
managerial assistance to women entrepreneurs. Women can choose to invest in MSMEs, the
cooperative sector, or the khadi and village Industries sector.
MSME Sector: The micro and small-scale Sector is a major area in which enthusiastic,
talented women can start several small units. The field is vast and as many prospective
women, entrepreneurs, as can venture, would find openings in it. It provides avenues in
various areas where raw material and labour and other infrastructural facilities are abundantly
available. It is easy to start units in this sector as it depends totally on locally available
resources. All entrepreneurs who are prepared to invest up to Rs.75 lakhs in fixed assets
can start a tiny unit in rural and backward areas. There is fair evidence of women all by
139
themselves managing tiny sectors very successfully. It is their commitment, hardworking

and risk-bearing natures that make fortunes of their units and enable them to succeed. As
women in India are still in the male dominating environment, it needs some effort for them
to break themselves free of restriction to prove themselves as successful entrepreneurs. As
small units are labour-intensive based on indigenous technology, locally available resources,
and their flexibility in changing the product line, it is not difficult for them to succeed in
this sector. Once women establish themselves as successful entrepreneurs, they can provide
employment opportunities to a considerable number of unemployed educated women. They
can start units in the manufacturing sector as well as the service sector in which there are
several approaches for prospective women entrepreneurs.
Rural Sector: Rural industries are vital for the development of rural areas, though they
are generally associated with agriculture, forest produce and handloom. Rural industries
are characterized by the high potential for employment and income generation. These
industries are using locally available raw materials and operate with low investments in
plants and machinery. Women can successfully venture into various rural industries such
as bee-keeping, making of hand-made papers, bags, carpentry, bio-gas, making of palm
gur, candles, perfumes, matchbox, soaps and non-edible oils, leather goods, processing of
pulses and cereals, fruit-processing and the preservation etc. Increased women participation
in such ventures in rural areas leads to their self-sufficiency and greater economic freedom.
Microenterprises in rural areas have a commendable role in empowering women in rural
areas. They provide gainful employment to women and helps to develop personal and social
capabilities in them. Women entrepreneurship in microenterprises gives them much needed
financial independence, self-confidence and a better standard of living. Economic betterment
of women leads to equal socio-economic opportunities, gender justice, property rights,
political representations and ultimately results in the overall development of the nation.
3.7 Institutional support for women entrepreneurship in India

To foster women’s entrepreneurship in our country, several institutions have launched
special programs and schemes with a variety of packages. They are intended to provide
financial as well as managerial support to them to set up their units in areas of their interest.
The government of India canalizes assistance through these institutions for developing their
ventures. In India, there are several credible institutions established for the development of
women entrepreneurship, namely, Canara Bank Centre for Entrepreneurship Development
for women (CED), Entrepreneurship Development Institute of India (EDII), Andhra Pradesh
State Financial Corporation (APSFC) Women Entrepreneurship Scheme, IFCI Interest
Subsidy Scheme, IDBI Mahila Vidhya Nidhi Scheme, National Institute for Entrepreneurship
and Small Business Development (NIESBUD), Centre for Entrepreneurship Development
of Karnataka (CEDOK), SBI Shree Shakthi Scheme etc.

4. Discussion and Findings

This study produced results which corroborate the findings of a great deal of the previous
work in women entrepreneurship. The expert interview with the women entrepreneurs was
used to collect context information and insights on their problems.
4.1 Impediments to women entrepreneurship in India

The problems and constraints experienced by women entrepreneurs have resulted in
restricting and inhibiting the expansion of women's entrepreneurship. The major barriers
encountered by women entrepreneurs are:
a. Lower confidence in business skills:

In the male dominating social set-up, family members do not have much faith in women
possessing the abilities of decision-making. They often underestimate the capabilities and
skills of their women. Similarly, as women are accepting a subordinate status, they too
develop a false notion that men are more competent when it comes to financial matters.
b. Lack of working capital:

When it comes to entrepreneurship, women are considered in the high-risk category by the
potential funders. Indian women rarely own property and other valuable assets which can
be used as collateral for loans. They often depend on their family for their financial needs.
Investors too have apprehensions to support entrepreneurial ventures by women.
c. Socio-cultural barriers:
Women have to perform multiple roles in the family and it is very difficult for them to
create a work-life balance unless they have been given flexible working hours and space.
The system of social setup is patriarchal in nature in which men hold predominant roles in
financial decision making, political representations and control of the property. In case of
financial stress in the family, the girl child has to leave education for her brother. Successful
women entrepreneurship requires overcoming all these socio-cultural barriers. As a result,
this impedes the progress of women and handicaps them in the world of work. So, while
putting a step ahead into the entrepreneurial world or any other profession, women need
to think several times because of lack of confidence, economic dependence, and social
bindings.
d. Safety in work and public places:

Since women represent approximately 25 per cent of the total workforce in India, ensuring
safety in work and public places is of utmost importance for the physical, intellectual,
emotional, the well-being of women. The root cause of violence and oppression against
women is the lack of a value system in society. The frequent atrocities against women at
workplaces restrict women’s mobility and thereby, their economic participation and freedom.

141
5. Conclusion
Women empowerment through entrepreneurship has assumed greater importance in
the economic progress of an emerging economy like India. The development of a
sound entrepreneurship culture is an indicator of the empowerment of people, industrial
development, and the overall development of a country. The development of an economy
mainly depends on entrepreneurial ability, competence, and perseverance of the people
in general and women in particular. India has to sort out, nourish and develop competent
entrepreneurship, which is very vital for its rapid industrialization and empowerment of
the people. Despite the government level efforts for providing a congenial atmosphere for
women entrepreneurship and thereby women empowerment in the country, the progress is
still far behind expectations. The ongoing Covid pandemic crisis and industrial sickness
discourage women to take up entrepreneurship risks. Women entrepreneurs should be given
adequate motivation, guidance, training and financial support for taking up challenging
entrepreneurial tasks. The fostering of women entrepreneurship leads to their empowerment
and contribute to the uninterrupted economic development in challenging times.

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Confronting the Challenges to Equipoise: A
Study on Wompreneurs' Work-Life Balance
Sanjay Kumar Satapathy1
sanjayasatapathy2020@gmail.com
Anita Pareek2
anitapareek005@gmail.com
Abstract
The study explores the adversities faced by wompreneurs (Women Entrepreneurs) of Odisha
and talks about their work-life balance issues. The paper presents the viewpoint (motivation)
of wompreneurs as to why they think of starting an enterprise of their own. Focus is also laid
onthe supportive factors of wompreneurs and factors that disrupt maintaining their work-life
balance.The present exploratory paper is the outcome of a pilot study that has been performed
using thematic investigation & analysis to find out solutions for the above-mentioned issues.
For this paper, Qualitative research is used, which is conducted by assimilating data from
personal interviews and thematically analyzing it. Suggestions for better work-life balance
are given at the end. The area of work-life balance is devoid of studies in India, where
wompreneurs are expected to have a better work-life balance as they are their own "boss",
the paper tries to explore the authenticity of such assumptions. The model has been devised
with the above research objectives to provide insight into motivating factors and work-life
balance issues of wompreneurs, which can help the Government, policy-makers, research
fraternity and other training counselling institutions to emphasize such emerging issues that
would lead to empowered women as well as an empowered Nation.
Keywords: Entrepreneurship, Wompreneurs, Case study, Work-life balance, Role conflict
1. Introduction
1.1 Background
Entrepreneurship is the initiation of a new venture with a futuristic approach by assembling
and utilizing capital, raw material, and manpower for developmental activities. The
term Entrepreneurship first came into usage byRichard Cantillon (1680-1734) as cited
in Landstorm(1999).During the early twentieth century, the only reason women joined
entrepreneurship was because of economic needs, to supplement family needs or the personal
loss(divorce or death) of a spouse. Later in the 1990's the thinking started to transform, the
rise in feminism bought about various changes in the living and standard of women, the
1 Prof.Dr. Sanjay Satapathy is the Vice Chancellor of Kalahandi University, Bhawanipatna, Odisha, India.
2 Dr.Anita Pareek, Cuttack,Odisha.

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Confronting the Challenges to Equipoise: A Study on Wompreneurs' Work-Life Balance
world started to recognize and accept women as entrepreneurs. And women started to opt
for entrepreneurship as a preferable choice for greater flexibility and autonomy in managing
life. Women preferred entrepreneurship so that they can manage their work-life balance
better, i.e. the juggling of responsibility among work and family domains would be easier
with the flexibilities that entrepreneurship offers. The corporate world is not found very
appealing for women entrepreneurs nowadays owing to issues like gender biases, unequal
pay, and working hours, for which many women move towards the field of entrepreneurship
(Appelbaum Asham,&Argheyd, 2011).
Women entrepreneurs can be defined as a person with clarity in vision and entrepreneurial
skills like identification of market opportunities, risk-taking nature, and achievement as the
key motivation as given by Vinze(1987).Wompreneurship is the entrepreneurial venturing
by enterprising women in mostly sustainable business tracks with 7C's (Creativity, Care,
Consonance, Competence, Concatenation, Commitment, and Cooperation) (Satapathy,2018).
Though women's entrepreneurship has deep roots of origin the boost-up was only possible
after the rise in education, globalization, and availability of several schemes and programs
by the government for women, which has led to the ultimate Women Empowerment in India
as well Odisha.
Women entrepreneurs have proved to be building blocks of the economy, as India constitutes
a nearly equal population of both men and women, in such a scenario, women's contribution
as entrepreneurs are seemingly essential for building up a strong economy and leading to
global prosperity. Thus the participation of women in the economy is essential for themselves,
for creating employment for others as well as for boosting up the entire economy.
1.1.1 Wompreneurs of Odisha

The scenario with the state of Odisha shows that the population of men and women are
nearly equal and more women are employing themselves in various entrepreneurial
activities. This is believed to hit the economy of the state appealingly in recent years. Women
Entrepreneurship in Odisha is active both at rural and urban levels.
1.1.2 The rural wompreneurs:

Focusing on rural entrepreneurship, here women are majorly involved in agricultural
activities, Self Help Group(SHG), or informal business activities. The Mission Shakti, a
Government of Odisha initiative to empower rural women by supporting SHG's, hasbought
about a positive change in rural women, more women are earning their livelihoods by
engaging in various entrepreneurial activities like:
• Horticulture n Diary Buffalo
• Floriculture n Poultry farming
• Apiculture n Candle making
• Bag and carpet making n Pickle making
• Stone carving n Incense sticks making

The government of Odisha provide them training for the above activities and also sanctioning
loans at a minimum rate of interest, which has helped them to make products and sell them
to local markets as well as other districts to earn their living, become independent, and lead
a better life.
1.1.3 The urban wompreneurs

Urban women of Odisha are scaling and reaching new heights in entrepreneurship in Odisha,
an article by 'The New Indian Express'(Women entrepreneurs in Odisha show the start-
up way,2018), stated that around 310 startups were registered in the year 2018, for the
amendment in the start-up policies in the year 2018 which focused to engage more and more
women in entrepreneurial activity and empower them with various schemes and financial
support. Women of Odisha are into all sectors today, including innovative health/medical
care, apparel, jewellery designing, and food sector. Not only they are employing themselves
but creating employment for the general mass. Some of the urban wompreneurs of Odisha,
who have successfully led their start-up are:
• SumonaKarjee Mishra: Owner of Prantae Solutions, devising affordable technology for
various disorders.
• Tara Das: Owner of Rajmouni Foods, for the famous sweet delicacy of Odisha 'the
arishapitha'.
• Palak Aggarwal: Owner of BattiGhar, providing innovative solutions through sustainable
use of technology.
• AmbikaSatapathy: Owner of Zoo Fresh, fish and meat industry
• Megha Aggarwal: Owner of KalaGhar, organic and handmade art crafts for home decor
• Leena Dutta: Owner of Bestray Infotech Private Limited, providing Information
Technology(I.T) solutions specialized in the healthcare sector.
• Sukriti Patnaik: Owner of ' Indulge salons'
• SushmiNayakKanungo: Owner of Hot Mix Plant
• SubhraraniMohanty: Owner of S.S.Associates, Low carbon stoves
• BaijayantiRoutray : Owner of United Foods, Bakery.
• Jangyaseni Jena: Owner of GobindaDhupakathi (Incense sticks)
• Supreeti Mishra: Owner of Glaze Group of Companies, has diversified in various areas.
• Priyanka Padhi: Owner of Influidity Solutions, a business consulting firm.
These wompreneurs have left no segregation wall of so-called men's work and women's
work, as they are visibly present in almost all sectors. The reason for such proactiveness
is Government support, friendly policies of work, financial helping hand, and a conducive
ecosystem have all let the rise in entrepreneurship of women in Odisha. The Micro Small
and Medium Enterprise(MSME) Department and Women and Child-Care Development
Department of Odisha are equally alert about the needs of budding entrepreneurs and helping
them to contribute towards the growing economy of Odisha.

147
Women and entrepreneurship have a connection from early decades. The involvement
of women in business ventures has grown significantly and this work has resulted in the
evolvement of work-life balance-related issues. Thus, to gain a proper work-life balance
needs to apply a flexible timetable between work and personal roles(Frame,&Hartog, 2003).
Such imbalances seem to generate greater stress among the women counterpart. Studies
reveal that women face a burden that is not in equal proportion when it comes to household
responsibilities (Bird, 2006). The stress which is caused due to poor work-lifebalance practices
deteriorates the mental &physical health of women and creates and negative behavioral
changes among women. Also, the imbalance in the distribution of home responsibilities which
include child care and other household responsibilities becomes a big challenging barrier to the
advancement in the career of women (Cross, &Linehan, 2006).
In countries like India where the role of women is believed to be closely tied with family
as homemakers and males as a bread earner of the family, such tags make the career of
mothers less negotiable than that of fathers(Gronlund, 2007).There are various reasons
why women entered this field. Studies by researchers define them as Push and Pull factors
(Sarri, &Trihopoulou, 2005). Push and Pull factors are based on choice and necessity
respectively, Brush(1992). One such emerging need is work-life balance, which was earlier
seen to be a western concept, but due to globalization, it has a presence steadily spreading in
eastern cultures and affecting the organizational setup of the entire world (Lewis, Gambles,
&Rapoport, 2007).
Many research studies have supported the thought that the field of entrepreneurship has
been chosen due to the flexibility it offers women to maintain the equilibrium between home
and family. Brush, Carter, Gatewood, Greene, and Hart(2006) stated that it is women, who
resort to entrepreneurship as a solution more, compared to men. Also due to the biases in the
corporate world, women followed the way towards self-creation of job, where they enjoy the
freedom and can satisfy the need for achievement, flexibility, and economic independence.
But the challenges that come up in the way of wompreneurs are significantly unavoidable.
Though they do get some sort of support from friends, family, relatives, or the Government
which in a way helps them to sustain themselves in this profession. Earlier studies have
focused that the phenomena of work-life balance have been mostly concentrating managerial
levels(Lewis, &Cooper,2005) and there exist scarce study on the work-life balance of
wompreneursspecifically (Shelton, 2006), thus the issues like entrepreneurial motivation,
support network, and work-life balance should be investigated to bring out better insights
with the changing time and scenario.
The following section gives a view about theMotivation factors, Supporting factors, and
work-life balance issues of wompreneurs, based on the extant literature:

2.1 Motivation factors for women to become entrepreneurs

Passion
Many research studies have been conducted owing to the motivation factors of women for
start-ups. One of the most cited factors is passion and recognition. With the passage of
time, revolution and education, women discovered that they too have dreams and desires
to excel in career. Many of the women have started their enterprise even at a late age, just
because they once dreamed to do so. Passion and zeal to work is an essential factor that is
inter-related to other sub-factors like recognition, independence, and satisfaction. Passion
to work leads to personal growth and recognition(Okafor, &Amalu, 2010). Ivancevich,
Konopaske,& Matteson (1997)stated that passion for work and independence ultimately
enhances satisfaction which motivates women to go for start-ups. Also, it has been known
from studies that there are gender pay differences in the corporate world, due to which
women get dissatisfied and follow their hobby or passion as a new venture(Kirkwood,2009).
Pereira (2001) mentioned self-achievement as a highly promoting factor towards motivation
of new business. Many studies and real-life examples have shown that the will to follow
their dreams, they wish to become someone and the vigour to be self-defined have led many
women to become entrepreneurs and many of them have succeeded to do so.
Thus, from the above literature discussion, it is proposed that:
Premise1: The passion to achieve dreamshas a positive influence on the development of

women's entrepreneurship.
Economic needs
Entrepreneurship has a direct connection with earning and profit-making, while some earn to
fulfill their needs and others earn to live a lavish life. In the case of wompreneurs, economic
needs have been a significant factor to become an entrepreneur. Issue of Economic needs
arises due to reasons like spouse demise, divorce, serious illness of the bread earner of the
family and even sometimes cases where spouse don't share the earnings with wife which is
to be utilized for household purpose and spend it elsewhere due to which, domestic violence,
improper child care and degradation in living standards occur. These issues mostly connect
to the Indian context where women hesitate to go out and work due to various traditional and
social norms of society. But today women have to an extent overcome societal barriers and
are looking for a better financial status.
With time, the roles and duties of both men and women have experienced transformations.
In the early days, men were the sole bread earners of the family, and women were household
caregivers. But during the Industrial Revolution, the family started behaving as a cohesive
unit and, all members of the family worked inconsiderate of their age to contribute to the
enhance the economic situation of the family. Thus women entered as a contributor. (Tilly
and Scott, 1978). The involvement of both spouses at work disrupts this balance and creates
imbalance (Boyum-Breen, 2006). Okafor and Amalu (2010) stated in their study about,
many women starting a venture to support the economic needs of the family.

149
Premise2: Economic needs of the family have a positive influence on the development of
women entrepreneurship
Supporting factors for women entrepreneurs

Spouse support
Spouse support is considered as an essential factor in studies of female entrepreneurs, where
it has been studied considered both as positively as well as negatively affecting factor.
In the current study spousal support is taken as a support system, which provides bits of
advice, moral support and helps in the management of various tasks (McKay, 2001). A
supporting hand from a spouse helps women in managing their role conflicts and emotional
strains(Berkowitz & Perkins, 1984). Spousal support also helps to reduce work-life balance
among wompreneurs(Kim & Ling, 2001). Many times husband supports their wife's ventures
because she brings new economic opportunities to the family by earning at par with her
husband(Kim& Ling, 2001). There have been findings which state that the recognition and
contribution of wompreneurs bring happiness and satisfaction among spouse and family
members and they have a sense of pride that their daughter-in-law is contributing to society
and bringing name and fame to their family. Rosenbaum and Cohen (1999) stated that
wompreneurs with spousal support often face less stress and follow their passion ceaselessly.
(Dehle Larsen & Landers 2001) stated in the study that spousal support for wompreneurs is
the most desired and effective one among all other types of social supports.
Thus, from the above literature discussion, it is proposed that
Premise 3: Supporting factors have a positive influence on the development of women

entrepreneurship
Competencies
The term competency was coined by Boyatzis (1982). He conducted a study that explored
100 competencies from a sample of 200 managers. Based on the finding, he defined
competency as a certain behavior that matches with the demands of the job and parameters
of an organization, which ultimately results in the desired behavior. The terms like talent,
abilities, and competency are interchangeably used in the literature of research(Mitchelmore,
& Rowley, 2013). Competency in terms of entrepreneurship relates to developmental and
growth steps taken towards new ventures (Bird, 1995). Women are said to be comparatively
weak than men in terms of financial skills and good at interpersonal relations(Collerette,
& Aubry, 1990), such an existing skillset give way to new opportunities in the field of
entrepreneurship. These skill-sets become the catalyst for wompreneurs which are non-
substitutable and rare in nature (Wernerfelt, 1984). Competency helps to c manage work
better and enhance performance. A person having a good skill set can manage situations
better at home and work. The skillset helps wompreneurs to grow and excel at par with
society. Competencies are mostly inborn but can be developed and enhanced with time to
meet the growing needs, as the struggles of a competent individual become in a way easy
than a less competent person.

Premise 4: Competencies havea positive influence on the development of women

entrepreneurship
2.2 Work-life Balance factors of women entrepreneurs

Role conflict
Women have several roles to portray like wife, caregiver, mother, daughter (Casper,
&Bianchi, 2001). The Social role theory entails that every role has an expectation attached
to it (Eagly, &Wood, 2011). And all the roles have to be performed in such a way that
people connected with, get satisfaction in terms of expectations. Failure in roles often
leads to dissatisfaction from other members. Any incompetency in performing roles creates
a disturbance in both family and work-life (Greenhaus &Beutell, 1985). The coexistence
of various roles creates stress and anxiety (Eagle, Icenogle, Maes,& Miles 1998). A lot
of conflicts have been identified, as an outcome of factors, such as overburden of roles,
uncertainty in roles, collision in the role, lack of independence, and avoiding reward system
(Moore, 2000). This pressure of various roles from different domains of life and the stress to
cope with them creates role conflicts and deteriorates the quality of life(Mauno, Kinnunen,
&Ruokolainen, 2006).
Premise 5: Role conflict has a negative influence on the development of women's

entrepreneurship.
Emotional instability
The psychological stressors that create stress and anxiety are majorly from work, known
as 'work stress infusers' compared to 'family stress infusers'. The women who cannot
balance both domains often get burnout anxiety and get derive no satisfaction from any
domain(Makowska,1998). The road to handling both work and family together often
create a crossroad situation for women and adversity affects the health and wellbeing of
women(Carlson, Kacmar & Williams 2000.
Premise 6: Emotional instability have a negative influence on the development of

women entrepreneurship

• To investigate the enterprise start-up motives for today's wompreneurs.
• To find out the Work-life balance issues that wompreneurs face nowadays
• To project the factors which wompreneurs believe to be their 'support factors'
• To present the suggestions given by wompreneurs in this study.

151
The data is collected from the city of Bhubaneswar(capital city of Odisha), from October
2019 to November 2019 using convenience sampling and data is collected via personal
interview(qualitative research). An interview method provides deep insight into the response
given by the respondents and the reasons after it. It also helps to analyze the data on a
behavioral basis even though it is non-statistical, this method can draw critical reasoning
and understanding of respondent's behavior which is sometimes not possible using a written
questionnaire.
Threeentrepreneurs of the city were chosen for this study and the mode of interaction was
a face-to-face interview, where the name has been kept unidentified for privacy reasons
provided by them. The entrepreneurs are selected from three different sectors, to gain more
clarity sector-wise. The sole aim of these interviews is to prove the objectives of this study
by enquiring about the motivating factors of their entrepreneurship, the supporting factors of
their entrepreneurship, and their key work-life balance issues. To achieve the objectivity of
this study the elaborated interviews are put as case studies where a case study is relevant for
a study of this kind having a limited geographic area and limited respondents (Zainal, 2007).
The cases taken up for this study are described in Figure 1:
Figure 1 : Cases were taken up for this study
Source: Authors
The Methodology adopted for this study is given in Figure 2 by using a diagrammatical
approach.

Figure2 :
Reviewing papers and Extant Literature on:
Women entrepreneurs Work-Life Balance
Identification of Issues from Extant Literature:
Motivation Support Work-life balance
Identification of Factors related to the Issues from Extant Literature
Motivation Factors Support Factors Work-life balance factor

Economic- Spousal- Role Emotional-
Passion Competencies
Needs support conflict Instability
Setting Premise for each Factor
Premise 1 Premise 2 Premise 3 Premise 4 Premise 5 Premise 6
Identification of entrepreneurs from different sectors
Entrepreneur 1 Entrepreneur 2 Entrepreneur3 (Running

(Food sector) (Running school) chain of beauty salons)
Personal Interview
Conversion of Interview stories in the case study
Keen Observation of each Case to draw Findings
Findings and Discussions
Proposed Model based on

Findings
Diagrammatic
representation of the
Methodology
Source: Authors

153
4. Case Description
4.1 Case:1
Mrs. A, a housewife from Bhubaneswar, havingthree children, wanted to start something on
her own, due to the financial requirements and ill health of her husband. She initially thought
of a stitching/tailoring shop but due to lack of capital, she decided to start a business with
whatever minimal resources she had and which required no extra training. She converted
her passion for cooking into a business. The famous sweet delicacy of Odisha, with a few
kilograms of raw material she started her business, in which she initially faced a lot of
troubles for the first six years. In the meantime, when her business started to grow, she
was at time betrayed by her staff who learned the recipe from her and started a business of
their own. With a lot of patience and hard work she, did not stop and continued to sell the
sweets. Having so many hardships and managing a family was no easy for her. Having the
role of a mother, wife, and entrepreneur who was budding gave her many challenges. And
the biggest struggle was marketing her goods, gradually she gave samples to the big hotels
of Bhubaneswar, and her efforts succeeded. She faced a lot of emotional challenges while
bearing so many hard situations altogether. Every component of her life sought attention
from her. Today, she has her own food company which sells sweet delicacy and other snacks,
all big restaurants are her customer and she takes party/ marriage orders. Recently she was
felicitated by Government. All of this was the outcome of her spouse and family support.
Her husband was the motivation and emotional backbone, where her children helped her in
all stages from making to marketing. The cooking skills she learned from her mother-in-law
helped her to gain recognition as an entrepreneur, where her passion today is taking her to
new heights of success with every passing day.
4.2 Case:2
Mrs. B is a school owner at Bhubaneswar. She started her dream school with a capital of
30000/-, 17 students and five teachers and now the school has 150 teachers and 2000 students,
the first day-care school in the city. Not only she is an entrepreneur but a teacher, who believes
in quality education and parity among students, by not considering their academic results,
she says such biasedness demoralizes students and they cannot improvise their performance.
She completed her studies and married with a precondition that she would open a school
one day. She worked as a primary school teacher and was blessed with a son. At times it
became difficult to manage the profession so she quit the job for some time, but later she
again joined a college as a lecturer for the love she has for teaching (her passion). She
opened the first school in a cottage building with less than 20 students and a low fee, so easy
affordability. To continue and grow the school, she has to leave her job, as it was creating
stress to managing multiple responsibilities at a time. Her husband and in-laws supported
her in running the school, which gradually developed with time through Government help
and their investment, which they earned by running their small school. In the year 2002-
2004 the school received CBSE affiliation, after which she took a loan and developed the
infrastructure. She opened the first branch at Puri in 2015, after Bhubaneswar and today

the school is among the best schools in Bhubaneswar. She is also a national awardee and
believes that passion is the strongest will and courage for a women entrepreneur, which
helps her to achieve and balance all equations of life.
4.3 Case:3
Mrs. C is the owner of a beauty chain salon in Bhubaneswar. Not only she became a successful
entrepreneur but bought about a revolution in Odisha salon industry by educating women
about make-up skills. Born and bought up in a highly educated family, she gained education
outside Odisha and finally worked across European countries with her husband. There she
was exposed to various fashion and trends and decided to make her passion into a business.
In search of flexibility and pursuing her passion, she thought of leaving the corporate world
and starting her salon chain in India, for which she took professional beauty and makeup
courses. To follow her dreams, she left the high-paid jobs and shifted to India and opened
her salon in Bhubaneswar, with her spouse's support both, mentally and at work. The high-
paid jobs could not satisfy her passion and she wanted a bigger name and recognition in this
industry. The risk of leaving a settled job abroad and coming back home town for a new
venture created an immense emotional pressure, which bought in many challenges. But the
support network, zeal for a better earning, and the faith in her dreams gave her reasons to
start this venture. Having a daughter, she has multiple roles of mother, wife, and boss a huge
number of salon staff but, she tries to create that balance and get energy from the smiling and
happy faces of her satisfied clients. She believes that, though imbalance and challenges will
prevail each day, every problem has a solution, thus having love for your work and a support
structure can make women win any battle of life. She has also been recognized and awarded
by various bodies for being a strong leader.
4.3.1 Observation
It is observed that three of the cases had an underlying passion within them, which became
their ultimate motivation to start a new venture. Two of the cases show that along with
passion, they were also looking for the financial growth of their family. In three of the
cases, the major support system was their spouse and family. Along with this, their skill set
or the competencies they possessed helped them to stand high in tuff situations. The work-
life balance issues were mostly regarding role conflict (i.e. at a single time, they had to
portray various roles) and this role demand, along with other factors like risk-taking created
immense emotional pressure on them, which in the midway to success gave them many
challenging situations, but due to the supportive factors, they could reach various levels of
success. though three of them believe that both work and family are unavoidable spheres and
challenges are constant, so every day is a new day with fresh adversities and opportunities
with wompreneurs should embrace with agreeableness to become independent as well as
create the identity of their own.

155
5. Findings and Discussion

Though the journey of managing both work and family is not easy yet the case study project
that with few support factors both the spheres can be managed to a great extent. But in
absence of family and other support factors wompreneurs at times needs to quit their work
and in turn, destroy their motives and wishes to be an entrepreneur and establish their own
identity.
1.8 Proposed Model

Figure 3 : TheWompreneurial Balance Framework
+ve
WORK LIFE
SUPPORT BALANCE
MOTIVATION
FACTORS +ve FACTORS +ve ISSUES
Spouse support Role conflict

Passion
Competencies Emotional
Economic Need Instability
-ve
-ve
+ve - Positive impact
-ve - Negative impact
Source: Authors
The figure. 3 is the proposed model, The Wompreneurial Balance Framework, which
establishes the relationship among the motivation factors, support factors and work-
life balance factors and the impact they owe on each other. The model is based upon the
pieces of literature that authors have come across and cited in the Review Of Literature
and also insights are drawn from the case studies of this study. The support factors have a
positive impact on both motivation and work life balance factors, as support factors provide
a backbone to both these areas and possess a positive impact. The motivation factors if
are strong enough can spill a positive impact on work-life balance factors and decrease
the imbalance. Whereas the work-life balance issues hurt both motivation and well as
support factors, as these issues, disturb the existing equilibrium and leads to many health
and emotional troubles. The discussed cases in this study show that wompreneurs who had
strong motivation factors could be able to sustain their work-life balance, because of the

passion and needs they had, they tried to resolve and balance their issues, hence it has a
positive impact. The support factors in the discussed cases also prove to help get motivation
and manage work-life balance, which shows a positive impact. The work-life balance issues
harm the motivation and support factors, as these issues tend to create anxiety, health,
work, and family conflicts due to which many womprenurs quit their venture and become
victimized due to paucity of stability and balance.
6. Conclusion and Implication

The participation of women in entrepreneurship contributes to the economic development of
the nation. All around the world, a rise can be visibly marked in the number of entrepreneurs.
The review and cases state that womprenurship is affected by various factors which both
have positive and negative impacts on their way. On the other hand Work, Life Balance
is another unavoidable concept that is faced by wompreneurs and sometimes exaggerates
the level of adversities that wompreneurs face in day-to-day life. The cases signify that
challenges are unavoidable and wompreneurs need to create such a support network that
helps them in maintaining their work-life balance. Such study should be the means to draw
the attention of Government and policymakers to, include ideas in favorof work-life balance
of wompreneurs and such studies also motivate other wompreneurs to believe in themselves
and follow their dreams as stated in the cases of this study. This study draws the attention
of work-life balance as an affecting concept for wompreneurs also, as mostly it is believed
thatwompreneurs have more flexibility in life for which they face less imbalance, but the
literature partially supports this thought. As even after these wompreneurs are their own
'boss', they face a cross-road dilemma.
An entrepreneurial journey is never easy. Especially, as a woman, one may feel forced to
handle everything with balancing the household and work sphere. But, the truth is, no person
can do it all. To lead a healthy life, one must learn to balance self with work efficiently. So,
blaming and treating oneself for everything would de-motivate the growth of women as
bread earners. Rather the family, society, as well as government, should look for ways in
which women can keep both their spheres at par and prove to be excellent entrepreneurs, and
thus be a part of the growth of the nation. Awareness and togetherness of women can bring
forth catalytic change in micro and macro levels.
1.10 Suggestion by wompreneurs via the personal interviews in the study, insights
for managing better work-life balance and balanced life at large:
• Identifying works that are truly important
• Allocating stipulated time to filter distractions: set boundaries
• Avoiding jumping between multiple lines and streamlining tasks.
• Creating a strong support network: take external help
• Follow health routine
• Having practical expectations: having a perfect/stress-free life is a dream
• Devote time for yourself
• Don't compare with others

157
• Stick to plans: learn to say NO to time-wasters.

• Evaluate your plans: are they working
7. Limitations and Study Outreach

The study owes to a single city with a limited sample. Other studies can be conducted on
budding entrepreneurs. The model given in this study can be validated via various statistical
tools. Also, studies can be conducted on psychological factors that affect entrepreneurship
and work-life balance. Other studies on work and family stressors, as to individually
recognize the 'work stressors; and 'family stressors' for women preneurs.

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Zainal, Z. (2007) Case Study as a Research Method. JurnalKemanusiaan, 9, 1-6

Female Consumers Awareness Level on
Purchasing Online Beauty Products in
Kathmandu Valley
Seeprata Parajuli1, Bhawana Thapa2, Niranjan Devkota3, Udaya Raj
Paudel4, Saraswati Gautam5
Abstract
Consumer awareness about their appearance and beauty results in the growing demand
on the market for cosmetic and beauty products. Cosmetic used by consumers depends on
various attributes such as size, consistency, brand name, brand loyalty and labeling. This
study therefore tries to analyze awareness level of female consumers on purchasing online
beauty products in Kathmandu valley. Descriptive method is employed in this study where
285 female customers who buy cosmetics online are taken as sample for the study. Likewise,
awareness level is also measured with the help of awareness index. Findings of the study
revealed that 95% females are aware about online purchase of cosmetic products. Likewise,
both literate and illiterate women use online platforms to buy cosmetic products however,
the ratio of literate women is higher. Also, the trend to buy cosmetics product is higher in
unmarried compared to married females. Thus, the study concludes effectiveness of online
beauty products can be enhanced if online sites focuses on delivering quality products in
reliable price to customers.
Keywords: Female customers, Beauty products, Awareness, Kathmandu valley, Cosmetics
1. Introduction
The beauty products are witnessing tremendous growth on the market today and have
become one of the world's leading industries (Priyanto, 2019). It is estimated that 15-20
percent of the cosmetics market is rising annually in our country, Nepal. The demand for
skin whitening dominates the phenomenon relative to other beauty products (Kumar, 2005).
Consumer awareness about their appearance and beauty results in the growing demand on
the market for cosmetic and beauty products. Customers buy products based on their tastes,
desires and purchasing power (Cheung, Lee, & Rabjohn, 2008). Chaudhary (2018) entails
young people and adults in Nepal are more worried with their appearance and prefer to buy
cosmetic products for that. Cosmetic used by consumers depends on various attributes such
as size, consistency, brand name, brand loyalty and labeling (Chaudhary, 2018). Earlier price
1 Seeprata Parajuli is the faculty at Quest Int’l College Pokhara University, Nepal.
2 Bhawana Thapa is the faculty at Quest Int’l College Pokhara University, Nepal.
3 Niranjan Devkota is the faculty at Quest Int’l College Pokhara University, Nepal.
4 Udaya Raj Paudel is the faculty at Quest Int’l College Pokhara University, Nepal.
5 Saraswati Gautam is the faculty at Quest Int’l College Pokhara University, Nepal.

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Female Consumers Awareness Level on Purchasing Online Beauty Products in Kathmandu Valley
used to be the major dominating factor for customers (Hsu, Yen, Chiu, & Chang, 2006) but
now all of these variables are playing a major role in market dominance.
Marketing has a strong positive effect on customers' purchasing habits, and they have a
direct impact on consumers buying a product from a business they are well aware of (Ab
Rahman & Asrarhaghighi, 2015). Mirabi, Akbariyeh, & Tahmasebifard (2015) addresses the
six stages of information, understanding, desire, interest, persuasion and purchase suggested
by researchers before preparing or deciding to purchase the product. Online shopping in
Nepal is becoming increasingly popular by the day. Nearly all people with internet access
have been drawn to online niche products at least once and many decide to buy it as well
(Shrestha, 2019). Yet unfortunately, many are left disappointed due to many problems
with the online shopping experience. Online shopping websites in Nepal lack reviews and
ratings of clients. Such portals may provide some discount or coupon codes for each review
received to encourage further customer interaction (Chaudhary, 2018). Chaudhary (2018)
states that cosmetics that are used daily by females for beauty purpose have huge amount
of chemicals in them. There are lots of beauty products used and purchased by individuals
and beauty parlors for the customers however they don’t assure quality (Himalayan News
Service, 2019).
Nepal imported Rs. 3.65 billion of cosmetic products in FY2015/16, while Rs. 3.24 billion
of cosmetic products entered the country in FY2014/15 (NRB, 2016). However, Nepalese
women still hesitate to buy the cosmetics product online dues various reasons. In Nepalese
context, while e-commerce is booming like anything, online shopping for cosmetics products
is still to be improved a lot (Devkota et al., 2021). It can be a difficult and deliberate decision
to buy beauty products because these decisions affect an individual's overall appearance.
Thus, this study will help individual and beauty product sellers to learn about the consumer
purchase behavior and its coverage. Also, there are various factors that directly and indirectly
affect the purchase of beauty products. Many consumers today are particularly interested in
what they put on their bodies, with growing concerns about health and environment. This
study will also focus on impact of these products to the Nepalese female customers. Upon
completion of this paper online purchase pattern of cosmetics or beauty products can be
identified up to certain extent.
Further part of this study is structured as follows: second section incorporates review of
literature followed by methods used in section three. Fourth section presents results followed
by discussion in fifth section. Finally last part concludes the study.
Beauty gives blissful pleasure, which is why it is sought after (Feng, 2012). Every individual
seem to possess an inner need for beauty that is both primitive and rather intensive. We all
want to experience beauty, and to be beautiful - whole industries are built on these needs
(Kun, 2005). According to the French writer Anatole France, "beauty is the greatest power
in this world". So, obviously, it is a power to be reckoned with, and only a fool would

neglect trying to understand such might (Bechan, & Ehsanul Hoque, 2016). Food and Drugs
Administration (FDA) has defined the difference between personal care products and beauty
products. Under the law, some of the products commonly referred to as "personal care
products" are beauty products. These include, for example, skin moisturizers, perfumes,
lipsticks, fingernail polishes, eye and facial makeup preparations, shampoos, permanent
waves, hair colors, toothpastes, and deodorants. Some, however, are regulated as drugs.
Among these are skin protectants (such as lip balms and diaper ointments), mouthwashes
marketed with therapeutic claims, antiperspirants, and treatments for dandruff or acne
(Sameer, 2007).
Today, the worldwide beauty industry, which covers everything from hair and skin care to
makeup, is an estimated $425 billion industry. In countries like Nepal, where society and
communities have experienced lots of financial related issues, however with the changing
lifestyle of people lots of money has been spent in beauty products. Not just the female but
even men have been using beauty products in Nepal too (Shrestha, 2019). From casual day to
party day’s beauty products has become part of our everyday routine. Similar to the hundreds
or perhaps thousands of grocery stores around town, there are cosmetic shops set up at every
nook and corner of Kathmandu. From departmental stores to local beauty parlors, there is
no dearth of cosmetic products for potential customers (Anjana, 2017). Beauty products
are mainly imported from abroad. Nepal gets its cosmetics products of various brands from
a number of different countries. Needless to say, like other imports, a significant share of
cosmetics products available in Nepal is manufactured in India (Kumar, 2005).
The importance of cosmetics can be gauged by their best feature. The right cosmetic products
provide nutrition for skin, ensuring it stays hydrated and supple. Since your body needs
care and the right food, quality beauty products can give your body the nutrition it needs.
Cleansing and exfoliating removes impurities from the skin’s surface and also cleans out the
pores. If left to their devices, these pores can fill with oil and then cause other skin issues
(Cash, & Smith, 1982). Women who work in the corporate sector know the importance of
making the right impressions. They need the right beauty products to make sure they look
professional and are up to the mark. Employment laws suggest that candidates shouldn’t be
judged on their appearance, but with the look on point there’s always a chance that female
can get a leg up (Mirabi et al., 2015).
Today social media plays greater role as a marketing platform for any companies and have
greater role in influencing customers to purchase the products as well. As per the research
instagram, YouTube are generally popular for marketing content as well including market
for beauty products and are effective source where customers rely upon to buy their beauty
products (Denton, 2019). As mentioned by Kinski (2017) there were 14.9 billion videos
related to beauty products on You Tube and 700 million videos were being watched monthly.
However only 3% were actually uploaded or controlled by actual brands remaining 97%
were uploaded and reviewed by vloggers. Also, consumers want to see real results of the
products being advertise so that they can expect same result with themselves.

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The research shows that online retail was projected to be $271.1 billion by 2011 (Forrester
Research, 2006). Online shopping is quite adopted by people of this generation however
they also opt for in-store shopping (Millenials, 2015). Sebastianelli et al. (2008) mentioned
that women were more likely to use internet to buy clothes, beauty products and toys. For
instance, websites attracts women in buying clothes and beauty products by offering various
coupons and discounts.
3. Research Methods
3.1 Research design and study area
There are numbers of customers who purchase online products on daily basis and among
them, for this study customers who buy cosmetic products online particularly from
Kathmandu Valley are considered. Kathmandu valley is situated between 27 ° 32'13" and 27
° 32'13" latitudes. The latitudes of 27° 49'10" to the north, and the ranges of 85° 11'31" and
85°31'38" to the south the east, at an altitude of 1,300 meters above sea level. It occupies
an area of 899 square kilometers and is divided into three areas: Kathmandu, Lalitpur, and
Bhaktapur, with a combined area of 665 square kilometers.
3.2 Population and sample of the study

All the customers having willingness to purchase beauty products online and who stalk
in the pages are considered as population for the study. Female customers of all over
Kathmandu who own use online platform to purchase beauty products are considered as
population of the study. Following Lipnevich et al. (2011) and Paudel et al. (2020) the given
formula was used to derive the sample size n = z2pq/l2. Where, n0= sample size required
for study, Standard tabulated value for 5% level of significance (z) = 1.96, p= Prevalence of
female customers awareness on purchasing online beauty product 50 % = 0.5. So, P= 0.5,
q= 1-p, = 0.5, Allowable error that can be tolerated (e) = 5 %. Would make sample size of
403 however, if allowable error that can be tolerated (e) = 6%. In calculation, n = (1.96)2
×0.5×0.5/ (0.06) 2 that results total 266.78 respondents. We also added 6% non-response error
6%, i.e. 266.78*6/100 (i.e. 13.34). Thus, adding all this results, the representative sample
should be (266.78+13.34) = 280.12(≈280). Thus, this study collects total 285 samples from
Kathmandu valley.

Figure 1 : Study Area
Note. Based on Researcher’s Calculation from Survey, 2020

3.3 Research instruments

Descriptive research deign has been used in this study. To meet the objective of our study
following Devkota et al. (2021) convenient sampling techniques has been used. Hankins
et al. (2000) and Paudel and Devkota (2018) stated that this sampling can be beneficial
for the study when researcher wants to reach target fast and sampling, proportionality is
not the main concern. The main instrument for this analysis is a standardized interview
questionnaire. Further, expert opinions, pre-test were also used for the effectiveness of the
study. Finally, data analysis is carried out on the basis of descriptive analysis as well as an
index of awareness among the Nepalese female towards online purchase intention.
Awareness index shows awareness level of respondents regarding female consumer of

beauty products of the Kathmandu Valley. Here the respondents are classified into four
categories i.e. information sources, shopping orientation, products attributes, brand attitude
and intent to purchase. Awareness was measured in multiple factors which are explained
accordingly. Then two of these three dimensions are evaluated at three ranges that are less
aware, moderately aware and highly aware. The ranking is shown by the index number. The
0-49 index is graded as less satisfied, the 50-74 indexes as moderately satisfied, and the 75-
100 value index as highly satisfied. For the index, each respondent with the answers to the
given question is first calculated separately.

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4. Result and Discussion

4.1 Socio-demographic characteristics
Among 285 female online cosmetic products purchaser taken for the study, it was seen that
females of age 21-30 (62.45%) were more inclined towards purchase of online cosmetic
products. Likewise, this study also revealed that around 96% of the respondents have
attended formal education and 4% of online purchasers have not received formal education.
Among which most of the respondents (42.45% ) had intermediate level of education which
also showcase that both literate and illiterate females uses online sites to purchase their
cosmetics and it is not necessary that only literate people could use sites for any online
shopping though only few (5.61%) illiterate uses online tools for shopping cosmetics.
Table 1 : Socio-Demographic Characteristics

Variables Number Percentage
Age
Below 20 39 13.68
21-30 178 62.45
31-40 54 18.94
41-50 14 4.91
Education
Illiterate 16 5.61
Upto Primary Level 25 8.77
Upto Secondary Level 89 31.22
Intermediate 121 42.45
Masters 30 10.52
Above Masters 4 1.40
Marital Status
Married 126 44.21
Unmarried 146 51.22
Others 13 4.56
In case of online purchase of beauty products the most important factor the affects the most
is the marital status of women as women are married they are expected to spend the most.
If the women are married they are expected to spend more and more money in the cosmetic
products and they tend to use lots of beauty products. However our study revealed that
51.22% respondents who buy cosmetics online are unmarried. This means unmarried ladies
spend more on cosmetics while comparing to married woman.

4.2 Status of female consumers’ on online purchase of beauty products

There are various groups of people who are extremely careful and interested in cosmetic
products (Bosnjak et al., 2007). The importance of beauty products has increased as many
people want to stay young and attractive. Beauty products is not just about being beautiful
but it enhances personality of girls, builds confidence and also maintains good perception
in others eyes.
Table 2 unleashed that among 285 respondents only 1% respondents does not use any kind
of beauty products remaining 99% uses beauty products in different forms. It was also
identified that most of the females (40%) who responded to this study has been using some
kind of beauty products from 5-10 years. However, only 8% female stated that they have
been using beauty products since 20 years that means the craze for beauty products among
females in Nepal has just emerged and that with the emergence of online platforms and
social media. In many different cultures, beauty items are commonly used and embraced.
The artistic self-expression and self-identity factor can be attributed to the popularity of
beauty products (Kun, 2005).
Table 2 : Status of females on beauty products consumption

Yes % No %
Use of beauty product(s) 281 99 4 1
Influence of online advertisements on purchase of beauty 179 62.8 106 37.1
products
Visits websites/pages of cosmetic products 159 56 126 44
Influence of information related to success of cosmetic 221 77.6 64 22.5
products
View relatable advertisements on internet 205 72 80 28
Guarantees influences on purchase 159 56 126 44
Friend/Family suggestion 205 72 80 28
Consultation at beauty product counter 205 72 80 28
Influence of free gifts 160 56 125 44
Special Promotion/Event/Sale 179 62.8 106 37.2
Social Responsibility held by beauty products 179 62.8 106 37.2
Price influence 205 72 80 28
Colors, Text, and/or Shape of the Packaging Influence 179 62.8 106 37.2
Superior Brand Choice 221 77.6 64 22.5
Shopaholic 160 56 125 44
Attribute of beauty products 160 56 125 44
Basically, females were found to use Lip Cosmetics, Eye Cosmetics, Hair Care Cosmetics
and Skin Care Cosmetics, Facial Products and Eye Cosmetics. However, majority of females
(185) were found to use lip cosmetic products and eye products were used by least number

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of females (81). As with most industries, marketing and advertising internal processes have
become more effective and efficient by moving online and, thus, can cut costs and save time.
In line with this the study also shows that around 63% of respondents are directly influenced
by the online advertisement. The study further indicated that 56% customers’ visits websites
and pages of beauty products before they purchase them on the other hand, 44% does not
visit any websites or pages while buying beauty products. The advertisements promote an
idealized lifestyle and manipulate readers to a certain extent into believing whatever that is
advertised is indeed true (Kaur et al., 2017).
In our result, we found out that 221 out of 285 respondents are influenced by the information
provided in the website or page about the success of the product given in advertisements
influenced them to purchase beauty product. This denotes that 77% of respondents do read and
check the information provided in the advertisement. Also, it was found that approximately
28% of respondents do not relate themselves to the advertisement of beauty product while
rest 72% of respondents can relate themselves. This shows that maximum respondents can
relate themselves to advertisement displayed by cosmetic companies. On the similar note
56% females agreed that guarantees made in an advertisement influenced them to purchase
particular beauty product. Similarly, Family and friends affect young people’s behavior in
various ways. Aidla (2011) set as example, traditions and values are very important in the
family while among friends the significant factor is social pressure. 72% female denoted that
they do get influenced by friends and family while buying beauty products.
Likewise, 72% respondents bought the beauty products because it was given during a
consultation at a cosmetic counter of various departmental store and malls. This shows that
it is an effective way to sell the beauty products by putting the store and stalls and giving
consultations to the customers that visits to the departmental stores and shopping malls for
various products. Sometimes, they even get what they were searching for in such stores and
malls. According to a research done by Bailey (2011) women shop for skincare items as
a way to indulge themselves. They want to buy expensive-looking items from the luxury
brands and they want to be pampered at the beauty counter. Similar to the findings 56%
females in Kathmandu valley tend to buy beauty products because the company was offering
free gifts however, 44% would look for various other factors rather than gifts while buying
cosmetic products as they affect their health as well.
Consumers also feel more pleased with their purchase when it is part of a promotion. 179 out
of 285 respondents do get influenced by the beauty products promotional events and sale.
Promotion, events and sale can be conducted frequently in order to get good customer attention
in the field of marketing plus in the case of female products female tend to get more attracted
by these sales and offers. Social responsibility has been gaining attention of customers of
different segments. Likewise, customers who purchase beauty products have also seen to be
being aware towards the social responsibility that the cosmetic companies are practicing. In line
with the same factor it was found that 179 out of 285 respondents do get influenced whether
or not the purchased beauty product’s company practices social responsibility. From this it can
also be said that in Nepal as well customers are being aware about the social responsibility

practices followed by the companies where they buy or are planning to buy any products which
also brings companies into pressure to follow social responsibility.
Though Nepal is experiencing changes in shopping pattern, adopting online platforms for
shopping price factor still plays crucial role while making purchase decision. But, while it is
the matter of cosmetic products 72% female stated that price factor does not influence them
to buy cosmetic products, they try to purchase genuine quality which suits them, their skin
the most. But, 28% respondents feel that expensive beauty products are of better quality.
Also, 62.8% cosmetic buyers stated that color, texts, shape of packaging influences them to
buy cosmetic products to greater extent. Salim Khraim (2011) states in the cosmetic market,
luxury cosmetics, such as Max factor, L'Oreal, Revlon have a brand name picture of high
product class and broad recognition and customers opt for those products with stronger
brand name which can be stated true in this study as well, as 77.6% customers would make
choice of superior brand products in comparison to non-branded products. Likewise, Out of
285 females 160 believe that they purchase of particular beauty product based on frequency
of shopping with the brand and regularity to the website is discussed. And rests 125 do not
believe that they purchase of particular beauty product based on frequency of shopping
with the brand and regularity to the website is discussed and 56% thinks brand is the most
important attribute to be considered while purchasing any beauty product.
4.3 Preference on online purchase

Study showed that there are mainly five reasons for consumer to prefer online store to buy
beauty products namely; Convenience, prompt service, comparability, business to consumer
(B2C) and reasonable pricing.
Figure 2 : Preference on Online Purchase
Majority (45.9%) of customers prefer online purchase because they think they can compare
price, quality and other various related factors from one site to another and one page to
another which sells similar beauty products. Which could make their purchase decision easier.
However, 95.7% customers feel that pricings schemes of online shops are not reasonable.

169
Likewise, 39.6% prefer online purchasing due to convenience, 28.7% due to prompt service
and 27.1% due to B2C facility.
Figure 3 : Reasons for not Choosing Online Purchase
Besides the good factors, there are drawbacks of online stores as well. The study analyzed
some of the major reasons that make online business unreliable and backwards. The major
reasons are trust issues, delayed response, costly and no timely delivery. Among various
reasons one of the major reasons why customers don’t prefer online purchase of cosmetic
products is online cosmetic products are costly as stated by 45.96% respondents. However,
only 26.6% does not prefer online purchase of cosmetics because they think products are
not delivered on time. Similarly, 45.26% have trust issues with online shops/companies and
43.15% feels online platforms provides slow response.
4.4 Online purchase awareness index

Awareness index shows awareness level of female consumers regarding online consumption
of beauty products in Kathmandu Valley. Here awareness level was generated by classifying
response into four categories i.e. information sources, shopping orientation, products
attributes, brand attitude and intent to purchase.

Table 3 : Awareness Index

A Information sources Yes No
Online advertisements influenced me to purchase beauty products 218 67
I visit websites/pages that sell beauty products 175 110
Information about the success of the product given in advertisements 213 72
influenced me to purchase beauty product.
I am more likely to buy an beauty product if I can personally relate to 204 81
its advertisement
Guarantees made in an advertisement influenced me to purchase 194 91
beauty product
I bought beauty products after they were suggested by a friend or 205 80
family member
B Shopping Orientation Yes No

I purchased beauty products online because the website was offering a 179 106
free gift
I purchased beauty products online based on the special promotion/ 193 92
event/sale
I purchased beauty product because the online salesperson pressured 104 181
me into buying
I purchased beauty product online because the brand practices social 177 108
responsibility
C Product Attributes
The price influenced me to purchase my product. 168 117
The “expensive” price influenced me to purchase my beauty product 177 108
because I felt like the product must be made of quality
The colors, text, and/or shape of the packaging influenced me to 175 110
purchase my product.
D Brand attitude and intent to purchase Yes No

I purchased beauty product from the cosmetic and skincare brand I 172 113
perceive as superior to the rest.
The brand that makes the product is the most important attribute when 166 119
considering the purchase of a beauty product.

171
Awareness was measured in multiple factors which are explained accordingly. Then two of
these three dimensions are evaluated at three ranges that are less aware, moderately aware
and highly aware. The ranking is shown by the index number. The 0-50 index is graded
as less aware and the 51-100 value index as highly aware. For the index, each respondent
with the answers to the given question is first calculated separately. In comparison with the
users, further satisfaction level is then measured in conjunction with the gender, showing
the percentage of male and female users' satisfaction level. Under awareness index we have
analyzed and considered various variables that further help to depict the awareness level of
the users on online shopping. Thus, the study found that 95% females are aware about the
online purchase of beauty products.
4.5 Challenges on online purchase of beauty products

Conducting business on the Internet can offer entrepreneurs a variety of advantages over
other methods, such as not having the overhead associated with operating a brick-and-mortar
store and eliminating the need to drive great distances to make sales calls. It can also provide
the flexibility of doing business at your convenience. Despite the advantages, however, there
are also some problems that can arise when doing business online (Evans, & Volery, 2001).
This study indicates that 28% respondents did not faced much challenges in online purchase
of beauty products whereas 72% respondents encountered lots of challenges with online
purchase of beauty products which is presented below in figure 4.
Figure 4 : Possible Challenges
Major challenges in online purchase of beauty products as depicted from this study is arise
from supplier (31.2%). Likewise, other problems relating to online purchase are threats of
competitors, online companies, advertising agency, distribution channel and communicating

skill of seller. However, communicating skill of sellers is found to be causing less challenge
(0.004%) on online purchase.
4.6 Problems faced by consumers

Taking reference from our study 29% of respondents said that the major problems is of
fraud, 24% said that low quality products is delivered, 14%said that the problem is with high
cost, 17% said that the problem is delayed process,11 said that products do not match and
rest 5% said that the products are unreal ones.
Figure 5 : Problems Faced by Consumers
4.7 Managerial solution of effective online shopping beauty products

The major management strategies suggested by respondents are, Provide good/quality
products (27%), deliver what you promise (11%), have good policies for online shopping
(21%), keep promises made with your customers (16%), Learn about competitors next
move (15%), Make products cheaper (4%), Make products available (6%). Other suggested
solutions like cyber security, delivery right goods, and have good knowledge of location
etc. if these factors are enhanced online purchasers believe that online shopping can be
more effective. Likewise, various solutions were suggested by the respondents regarding the
betterment of beauty products, 41% said that schemes and benefits should be given, 21%
said that company need to use marketing policies. 22% said that location tracing should be
done 10% said that the trail system should be provided and rest 6% said the Customer choice
should be preferred.

173
Figure 6 : Suggestions for Betterment
5. Discussion
This study finds that 95% of total respondents have knowledge of online shopping which the
awareness level of online purchase in Nepal is gaining betterment. Hsu et al. (2006) further
stated that the faith of other individuals, such as friends, authorities and groups, would have a
positive impact on social factors to influence a person to use IT and make purchase decision
accordingly. The component associated with the behavioral intent to payment electronically
also resulted in perceived ease of use in the online purchase behavior of beauty products in
this study and the finding is highly significant.
This study found that the Nepalese online shopping consumers appear to pay more attention
to the timely service and quality of product. Supporting the result of previous research, the
online purchase behavior of beauty product's features dominate the behavioral intention or
their judgment on the online purchase behavior of beauty products, including the effect of
social influence. Nepal is becoming increasingly popular by the day. Nearly all people with
internet access have been drawn to online niche products at least once and many decide to
buy it as well (Shrestha, 2019). Yet unfortunately, many are left disappointed due to many
problems with the online shopping experience. Online shopping websites in Nepal lack
reviews and ratings of clients. Such portals may provide some discount or coupon codes
for each review received to encourage further customer interaction (Chaudhary, 2018). This
could help new customers on their website who are looking to buy. Often, as they provide
incentives, internal penalties may be levied on comments with false opinions and seller-
harmful opinions.

6. Conclusion
Since this paper aimed to analyze awareness of female consumer towards online purchase of
beauty products it was found that 95% females are aware related to online purchase of beauty
products. The study also indicated that though women are shifting their purchase behavior
to online platforms they still face challenges which arises due to the unreal products shown
in the picture of online sites or pages and the actual product differs which have also caused
reluctance among women to purchase beauty products online. Likewise, the price levied on
products are found to be comparatively higher than in stores. So, if online portals and sites
selling beauty products makes their selling efficient by providing real and quality products,
charging effective and reliable price then women are ready to make their purchase from
online sites and pages.
Therefore this study recommends that ensuring quality products, learning about competitor’s
next move, increasing online payment method and making users aware about it, giving
discounts and offers to customers can enhance online purchasing pattern of female
customers towards beauty products. However, this study only covered awareness of females
customers from Kathmandu valley so for more effective and reliable result further study can
be conducted targeting women of different areas of Nepal.

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A Systematic Review on
Blockchain in Education:
Opportunities and Challenges
Navin Duwadi1
Abstract
This study focuses on bloackchain as an emerging technology regarding its use to restructure
the systems and advance education upon quality outcomes. What are the benefits of
integrating blockchain in education concerning system reformation and advancement in
developing better educational process for all encompassing learning outcomes? With the
recent developments of blockchain applications across multiple domains, the education
industry seems to be benefited from this technology in considerable degree. Transcripts and
certificates play a vital role in individual’s life so it needs to be stored in tamper-proof and
long term available ledger. In pursuant to addressing afore stated question, this study bring
information regarding what blockchain technology is, how it functions and what its uses
if it comes to integrate with education at different levels. This may include reviewing the
conceptual/knowledge bases, research and development studies and sources that introduce
blcokchain including its features but with special highlight on how it has been integrated in
the education sector especially in innovative situation.
To this end, this study was designed to provide a systematic review of all the literature focused
on decentralized ledger technology. Multiple sources were reviewed following a systematic
pattern that allows selection of relevant sources, sort out information being guided by the
research question and make final selection of required information that connects with what
and how of Blockchain in education.
Keywords: Blockchain, Education, Ledgers, Certificate, Decentralized technology
1. Introduction
Blockchain technology was proposed by someone called Satoshi Nakamoto in 2008 and
was applied in a virtual currency application. Using blockchain technology, Nakamoto has
invented a digital currency called bitcoin. It is a peer-to-peer network that uses distributed
ledger technology to store and disseminate information (Nakamoto, 2009). After Satoshi
Nakamoto implemented blockchain technology to invent bitcoin there are many other
cryptocurrencies also started emerging on the market.
1 Navin Duwadi is a faculty for graduate studies at Global College International and a director of Department
of Information Technology.

Blockchain is a community record that consequently stores and checks transactions.

Blockchain is a decentralized ledger of digital transactions. A blockchain is a long chain
of connected data items that are saved on every participant device and can only be added
by a highest number of participant those who agree. There are public blockchains that
anybody may access and potentially contribute to, as well as private blockchains that are
only used within a company or organization. The blockchain at the heart of the Bitcoin
digital currency is the most well-known, but not the only, blockchain. The Digital ledger
technology (DLT) powers Bitcoin, Ethereum, and other digital currencies. Use cases for a
straightforward, obvious register of exchange information are various because DLT works
through a decentralized stage making it tamper-proof transactions (Ark, 2018).
Every block in the blockchain can store a little volume of data (generally around 1 MB), which
might be any information that has to be stored securely while still being widely disseminated.
These might be information of monetary transactions (virtual currency) or exam credentials
or learning records in the case of education (Sharples, & Domingue, 2016). That data is kept
on all participating devices and may be seen by anybody with the cryptographic ‘public key,'
but cannot changed or altered, even by the original author. The data records are timestamped,
ensuring a reliable and accurate record of the new information.
The blockchain is an enormous and worldwide encoded data set that goes to the requirement
for decentralization and security of cycles normal to general people and organizations,
finishing the syndication or monopoly of data by the elements that dealt with that data. In this
sort of phenomenal and general arrangement, a group of individual records called "blocks"
are joined in a “chain" that can't be altered, being approved by different PCs through the
Internet. An enormous, decentralized, encoded, and open book of records where different
specialists control the veracity of the information and guarantee its moral soundness were
discussed. Its utilization incorporates the exchange of cryptographic forms of money,
decentralized programming, and the enrollment of charges, and a long record of exchanges,
everything being equal. (Gomez, 2021)
In the beginning, blockchain technology was limited only to the digital currencies application
but these days there are lots of research undertaken to explore the importance of blockchain in
other domains such as healthcare, education, smart cities, banking, insurance, and many more.
The trend has shifted towards the security and verifiable system because blockchain provides
an unbreakable and unhackable system for computer-based applications (Magazine, 2015).
The new and quick advancement of dispersed figuring and blockchain innovation has
pushed us to reevaluate and reconsider a large number of the basic parts of the frameworks
of education, literacy and training. Ideas like trust, worth, protection, and personality are for
the most part, coming into question as another set-up of advancements has been introduced.
The recent and rapid advancement of distributed computing and blockchain technologies
has compelled to reconsider and redesign many of our established educational institutions.
A new set of technologies, concepts like trust, value, privacy, and identity are all being called
into question when the blockchain technology is brought into the academic institution.

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The main concern of blockchain technology in the education sector is how this technology can
provide the secure as well as a trustable and traceable exchange of educational information.
Later that information is shared among the multiple institutions in the field of education
including teaching and learning process that too encompass accreditation and validation of
educational achievements that are in turn secured in the ledger (Blockchain in education,
2021). It has been found that Blockchain technology provides an environment where
individuals can be the custodian of their academic records and won’t necessarily require
any intermediaries to record or alter records. Issuance, validation, and sharing of certificates
can also be done by education providers using blockchain technology, a cryptographic data
exchange which will ultimately help to prevent the certificate frauds that are seen so often.
A revolutionary field for technologies is identified in the education sector, an emerging area
where the requirement for the certificate is fundamental. It can be found on the multiple
research done by researchers, certain percentage of the applicants falsified the degree
certificates. The need to check this sort of data is presently not accidental and might be
valuable to keep away from certain ensuing debates (Sharma, 2018).
Students’ records are a very crucial part of the education sector, and with blockchain
innovation, resources like learner participation, courses, and installments toward educational
cost on the off chance that they go to a public or private school, grades, coursework, and
surprisingly their certificate can turn out to be essential for their own blockchain record. Since
these records can't be erased, this assists with information security in that it is permanent.
Student records are the property of the students rather than to the school. With blockchain,
no member can alter a record after it has been saved. On the unusual chance that a record
has a blunder, another record should be added to address it, and both the erroneous and right
records will stay apparent (Hance et al., 2021).
1.1 Problem statement

Document forgery is a developing issue that requires immediate attention. In recent years,
the fake replication of certificates has expanded dramatically, posing a threat to education
policy stakeholders. Fake diplomas not only deceive companies and colleges, but they also
deceive students. These days’ education institution and workforce seems to have victim of
the fraudulent academic documents. It is often found that some people have faked their
document to enter into the professional career. It has a negative impact on the society because
one without required qualification can damage the work force and the reputation of the
organization where they are working. It was found that even some reputed companies have
similar kind of issues on the past. In the context of developing countries like Nepal, people
are working in the sensitive areas such as medical industry and academic institution with the
fake qualification that will eventually destroys life of the pupils. So, the immediate action
is needed to control the spread of the forgery documents and blockchain based verification
system will be able to address the issue.

1.2 Objective
The main goal of our research is to,
(i) analyze the evolution of blockchain-related research topics across time and venues,
(ii) classify blockchain-related existing research,
(iii) identify the opportunities and challenges of blockchain technology implementation
in education, and
(iv) map the connections between the discovered blockchain opportunities and
challenges with the identified research topics.
In this section of the paper, some of the theories and ideas related to blockchain technology
and its application in the educational process and institutions has been explained.
The blockchain simply refers to the data records that have been hosted on decentralized
networks and are a part of the blockchain and cannot be modified. Blockchain is a peer-
to-peer network that uses cryptography technology to keep data safe. In the blockchain,
all existing records are managed by a group of nodes that cannot be owned by a single
entity so updating or even damaging records on all networks is nearly impossible. All of
the transactions that the block will bring are linked together so that they may be validated
and signed using cryptographic evidence that the blockchain and its volunteers have solved
(Guustaaf et al., 2021).
The application of blockchain-like virtual currency such as Bitcoin uses the public key
infrastructure (PKI) mechanism. In PKI, generally, pair of a public and private key is
distributed to the users. The public key is used to identify the address of the currency wallet
and a private key is used to identify the authenticity of the user. The ledger of the transaction
consists of the sender’s and receiver’s public key and the value of the transaction. In about
ten minutes, the transaction will be written in a block (Yli-Huumo et al., 2016). A previously
written block is then linked to this new block. All blocks, including information about each
transaction, are saved in the users' disk storage, which is referred to as nodes. Each node
stores information about all Bitcoin network transactions and uses prior blocks to verify the
integrity of each new transaction. Checking the accuracy of transactions rewards the nodes
(Haugsbakken & Langseth, 2019). Mining is the term for this process, and it is supported
by Proof-of-Work, which is one of the key concepts in Blockchain technology. A consensus
exists amongst all nodes when all transactions are successfully confirmed (Yli-Huumo et al.,
2016). The new blocks are linked to previous blocks and all the blocks are aligned in one
continuous chain. This chain of blocks is the public ledger technique of Blockchain.
According to Swan (2015) Blockchain is the decentralized overseeing strategy, intended

for distributing and moving cash for the clients of the digital currency. This strategy can
support the public record of all virtual currencies transaction that have at any point been

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executed, with no control of a third-party association. The benefit of Blockchain is that the
public record can't be adjusted or erased after the information has been supported by all
nodes. This is the reason Blockchain is well known of its information trustworthiness and
security attributes (Casino et al., 2019). Blockchain innovation can likewise be applied to
different sorts of users. It can, for instance establish an environment for virtual contracts
and peer to peer information sharing in a cloud computing service (Swan, 2015). The solid
place of Blockchain strategy, information trustworthiness, is the motivation behind why its
utilization stretches out additionally to different administrations and applications such as an
education sector.
2.1 Blockchain key features

2.1.1 Corruption proof transaction
There are several attractive blockchain qualities, but corruption proof is probably one of the
most important features of blockchain technology. Corruption proof also called Immutability
refers to the inability to change or alter anything (Iredale, 2021). This is one of the most
important blockchain aspects for ensuring that the technology stays as it is - a permanent,
unchangeable network. Blockchain technology differs from traditional financial systems in
a few ways. It ensures the blockchain features through a collection of nodes rather than
depending on centralized authorities (Haugsbakken & Langseth, 2019). The digital ledger is
duplicated on every node in the system. To add a transaction, each node must first verify its
legitimacy. If the majority agrees that it is correct, it is entered into the ledger. This increases
transparency and makes it impenetrable to corruption (Iredale,2021).
As a result, no one can add any transaction blocks to the ledger without the approval of the
majority of nodes. Furthermore, once the transaction blocks add to the ledger no one can
go back and alter the transaction. Thus, not any user will be able to change or delete the
transaction added on the ledger.
2.1.2 Decentralized technology

The network is decentralized, which means there is no governing authority or one individual
in charge of the network. The network is instead maintained by a collection of nodes, making
it decentralized. This is one of the most effective aspects of blockchain technology. The
blockchain puts the users, in a simple position. Users can access the system straight from the
web and keep the assets there because it does not require any regulating authority. Anything
from bitcoins to crucial documents, contracts, and other significant digital assets can be
stored. And, thanks to blockchain, the user will be able to exert direct control over them by
utilizing the private key (Iredale, 2021).
2.1.3 Improved security

Cryptography, when combined with decentralization, adds another degree of security for
individuals. Cryptography is a complicated mathematical procedure that protects against

attacks. Every piece of data on the blockchain is cryptographically hashed. In simple terms,
the network information conceals the underlying nature of the data (Iredale, 2021). Any
input data is passed through a mathematical method that generates a different form of value,
but the length remains constant. Each block in the ledger has its own hash and also contains
the hash of the previous block. Users will be provided with a private key to access the data
and a public key to make the transaction (Daley, 2021).
2.1.4 Distributed ledgers

In terms of hierarchy, all full nodes on the blockchain network are equal, and each node behaves
as an autonomous agent. On the local space, they store and maintain their own subsets of the
shared ledger. This kind of decentralized storage can solve a lot of the issues that a centralized
system has. It is frequently utilized in the field of blockchain because it can improve the
system's reliability, availability, and access efficiency (Raman & Varshney, 2018).
2.1.5 Consensus mechanism

Blockchain is a type of distributed ledger. Each and every user has the right to store and
manage the database and all the users will have a copy of the ledger. A consensus mechanism
refers to a set of rules that ensure all participants are on the same page of the ledger, thus
ensuring that the blockchain information stored in each node is not falsified. Nowadays,
there are many consensus mechanisms available such as proof of stake (PoS), proof of work
(PoW), and delegated proof of stake (DPoS) (Mingxiao et al., 2017).
2.1.6 Quick settlement

Transaction in a traditional system takes a long time to settle down. Blockchain provides a
faster settle downtime for the transaction (Arndt, 2019). Comparing multiple applications
of blockchain such as virtual currencies and digital certificates in education. People travel
overseas for higher education and it will be very hectic for them to receive documents in
a traditional way. Where Blockchains are now far too quick for them, and they can easily
transmit money or receive documents using blockchain technology (Iredale, 2021). The
smart contract system is another interesting fact. This may make it possible to conclude any
type of transaction more quickly. To this day, this is one of the most valuable blockchain
characteristics. People can send and receive money or documents for a little cost now that
the third party is out of the way.
2.2 The benefits of blockchain in education

2.2.1 Enhanced transparency
The immutable ledger technology of blockchain produces a chronological record of real-
time events. This is excellent for validating transcripts, displaying a complete report card,
and keeping students up to date on their progress. When a student submits their assignment
via blockchain, they can't "lose" it or claim it was misplaced by the teacher (Daley, 2021).

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2.2.2 Accountability through digital contracts

Smart contracts will soon be available to teachers, university officials, and students. Students
and teachers, for example, could sign a digital agreement outlining the limitations of an
assignment, as well as the due date and grading deadline. Smart contracts can potentially be
used to pay off student loans (Daley, 2021).
2.2.3 Incentivization of learning

Tokenization has become a cornerstone of blockchain technology. Academic institutions
will soon be able to incentivize students to pay off their student debts on time, and professors
will be able to motivate students by rewarding them with cryptocurrencies if they perform
well or complete a specific major. Tokenization's gamification aspect of teaching has proven
to be extremely effective (Daley, 2021).
2.2.4 Learning performance and personalization

Educators now have additional resources to monitor and oversee their pupils' performance
because to the transparency provided by blockchain data storage. Schools may provide a
fully tailored learning environment by employing smart contracts and their output as tools
to determine where a student is lagging. Institutions across the school district can access
student performance data stored on a blockchain and utilize it to improve educational
processes (Pixelplex, 2021).
This study follows systematic literature review. Systematic literature review is a method of
collecting, assessing, and interpreting all relevant research for a certain research question,
topic area, or phenomenon of interest. Primary studies are individual studies that contribute
to a systematic review; a systematic review is a type of secondary study. A systematic
literature review was conducted by searching for relevant papers according to Petersen et
al. (2008) principles. The systematic review process was chosen as research methodology
because the goal of the review was to explore the existing studies related to Blockchain
technology. The following subsections go over the steps of the guidelines.
The overall methodological approach includes the following,
1) Identify the need for a review, specify the research questions and develop a review
protocol.
2) Identify the research, select the studies, assess the quality, take notes and extract data,
synthesize the data.
3) Carried out the survey applications with blockchain in use for academic purposes.

3.1 Results of the review

The need for this review paper is to address the research trends as well as opportunities and
challenges in the blockchain and education sector. By looking at the existing secondary
research, it is clear that there are several gaps that has not yet been addressed and that
need to be addressed in order to have more practical implications. This paper has followed
the qualitative research methodology to explore existing research and identify the gaps.
To address the gap this paper has identified, gathered and interpreted the research article
to answer the specific research questions, and followed the systematic pattern to develop
review protocol by conducting research, separating multiple paper with certain criteria.
3.2 Research question

The study seeks to answer these research questions that are analytical in nature:
1) When and how often were blockchain research articles for education published?
The main aim of the research question is to identify the trends that includes the
publication trends over the time in a multiple region and also helps to understand the
research topic, blockchain in education is accepted by scientific research community as
a relevant research topic.
2) What are the opportunities that blockchain technology could bring into the field of
education?
This research question intends to identify the opportunities of employing blockchain
technology for education that have been discovered in the peer-reviewed literature. It
will also aid future scholars in their efforts to enhance blockchain adoption in the realm
of education.
3) What are the various challenges while implementing blockchain technology in education?
This research question intends to identify the challenges of implementing blockchain
technology for education that have been found from the peer-reviewed literatures. It will
also help future scholar to improve blockchain adoption in educational institution.
3.3 Conducted search

A comprehensive literature search was conducted between August 2021 to address our core
research question, and the results were updated in September 2021. Scopus, IEEE Explorer,
ACM Digital library and Google scholar were utilized as the main scientific database, and
all paper titles were searched for the term blockchain, decentralized ledger, education and
distributed ledger, and performed different combinations of keywords to search over the
search engines. Additional searches were carried out using the referenced works of relevant
articles. At the end of the process we have found around 300 publication in multiple databases.

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3.4 Inclusion and exclusion criteria

3.4.1 Inclusion criteria
Paper that contains present application of blockchain technology in education field.
Peer-reviewed research articles, conference proceedings papers, book chapters, review

papers, short surveys, serials etc. that present information about blockchain technology in
education.
Full paper available on the internet related to the blockchain technology in multiple domains.
3.4.2 Exclusion criteria

Paper that are not written in English, paper without missing abstracts, notes and editorials.
Software oriented articles of the blockchain technology
4. Discussion and Findings

The results of the systematic literature review are discussed in this section. Based on the
review most the research paper has been analyzed from the online database. Below is an
in-depth review of our study's main findings in relation to each of the research questions.
4.1 Example of blockchain based educational service providers

4.1.1 Blockcerts
Blockcerts is a Blockchain community based project of MIT based on Cambridge,
Massachusetts is an open standard that allows users to create, issue, examine, and verify
blockchain-based certificates. These digital recordings are cryptographically signed,
tamper-proof, and shareable and are stored on a blockchain (Daley, 2021). The goal is to
inspire a wave of innovation that will allow people to own and share their own official
records. Academic achievements, grades, transcripts, and even degrees can all be saved on
the Blockcerts, allowing immutable access to prior academic history. The main feature of
the Blockcert is to store student’s digital credentials and offers multiple applications such as
learner’s application, teacher’s application and user verification application.
4.1.2 APPII
APPII based on London, England used to authenticate credentials using blockchain
technology. To validate the academic credentials of prospective students and lecturers, the
company uses blockchain, smart contracts, and machine learning. Users of APPII build
a profile and complete their academic CV, which includes their educational history and
transcripts. APPII then uses blockchain to validate a user's identity and save their data in
its Blockchain (Daley, 2021). APPII has created a system that registers and evaluates the
credentials and experience of pupils and those already in the workforce utilizing modern
technologies such as blockchain and smart contracts. APPII also can be used as a career

verification tool that helps screening candidate resume for further selection with the help of
the blockchain technology.
4.1.3 Gilgamesh platform

Gilgamesh is a social platform based on San Jose, California for information exchange
that uses Ethereum smart contracts and blockchain technology. The network changes how
readers, critics, and authors interact and communicate with one another. Users can gain and
transmit knowledge in a secure environment using the Gilgamesh platform, which supports
widespread learning and education and urges the human race to become more thinking
and information-centric (Tuson, 2018). Using the feature of the blockchain technology
Gilgamesh platform has provided secure and reliable platform for learners and educators to
share common platform for certificate validation and verification.
4.1.4 ODEM
ODEM is a blockchain-based educational online platform that provides students with
economical academic courses that can be tailored to their specific needs (Pixelplex, 2021).
Students can communicate directly with academic experts and agree on the optimum learning
environment. The platform employs smart contracts and blockchain-enabled payment
systems to incentivize and reward students for their academic endeavors, as well as to
encourage teachers to produce better courses. The blockchain stores all of the certifications
that students have earned. As a result, they may be easily accessible and shared on social
media, as well as used as evidence in digital CVs.
4.1.5 Sony Global Education

Sony Global Education based on Tokyo, Japan is a distributed ledger that allows various
education providers to share their students' results (SGE, n.d). The blockchain network
serves as a repository for each student's lifetime digital transcript, which can then be used
for university transfers and education verification at the workplace. Sony plans to expand
the platform and create the foundation for a next-generation educational ecosystem in which
professors and students cooperate and share digital currency rewards.
4.1.6 Blockchain Education Network

The Blockchain Education Network (BEN) based on Newark, New York formally known
as College Cryptocurrency Network (CCN) is a global non-profit organization dedicated
to building a strong network of student groups for blockchain in education, invention, and
expansion (Ullah et al., 2021).
BEN was created to assist emerging, growing, and not-yet-existing college organizations
in establishing a presence on their campuses, receiving administrative recognition and
financing, and connecting students with similar college and institutions. In order to change
the face of electronic finance and innovation, BEN provides educational and professional
materials, contacts, speakers, and guidance (BEN, n.d).

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4.1.7 Disciplina
Disciplina based on Kesklinna, Tallinn, Estonia is a personalized learning management
system that keeps track of learners' academic achievement using blockchain technology
(Daley, 2021). Each student is given a score based on their academic performance,
extracurricular activities engagement, and other accomplishments. These results are used
by schools and institutions that have registered on the platform to personalize the learning
process and generate unique programs for each course. Disciplina also attempts to improve
communication between students and teachers by providing easy-to-use tools for grading,
rating, and reviewing. Recruitment firms and businesses can also use the platform to find
potential employees (Pixelplex, 2021).
4.1.8 Parchment
Parchment based on Scottsdale, Arizona, provides digital credential services to students,
academic institutions, and companies, and uses blockchain in education. K-12 educators can
upload any significant developmental progress to the company's blockchain. The platform
is used by higher education institutions to assess academic merit, process applications, and
issue unchangeable diplomas. Students also have 24/7 access to all educational information
and can simply share their academic achievements with potential employers and educational
institution (Daley, 2021).
4.1.9 Bitdegree
BitDegree based on Kaunas, Lithuania is more tech-focused online education platform
integrates blockchain ledgers and tokenization. To help more people learn about digital ledger
technology and eventually adopt a blockchain-related career, the organization offers online
courses such as “Cryptocurrency for Dummies: Ethereum vs Bitcoin and Much More.” The
site also encourages education by awarding tokenized scholarships for completion of the
course or fulfillment of specified goals (Daley, 2021).
4.2 Applications of blockchain technology in education

Some universities and institutes have begun to incorporate blockchain technology into
their educational programs, with the majority of them using it to assist academic degree
management and summative assessment of learning outcomes (Chen et al., 2018). The first
category, Certificate Verification, included research on the use of blockchain technology
to create digital certificates that can be consulted and verified by third parties via an
untrustworthy and immutable proof system, or even revoked if they were issued incorrectly.
Fake degrees, diplomas, and certificates are a serious issue in the educational area these days,
and verifying their authenticity takes a lot of time and effort. Blockchain technology has the
potential to help reduce certificate and degree fraud. As a result, a number of educational
institutions have begun to employ this technology to develop a digital certificate that can be
consulted and validated by third parties via an unreliable and unchangeable proof system.
(Loukil et al., 2021).

The second category, Student-centric Educational Record Management, included a variety

of topics. Students should be able to access and control their own educational data via
blockchain technology. For example, Liang and Zhao (Liang and Zhao, 2020) developed
a blockchain-based system for full quality assessment of students to overcome issues with
keeping students' study data.
Furthermore, Blockchain can also function as a skilled based transformation bank. In

particular, the blockchain learning ledger keeps track of the users' knowledge and skills
growth by recording extensive information about their learning experiences. All of them
can be converted into a type of digital currency and stored on a blockchain network in
accordance with a set of detailed standards. Students will be rewarded for their academic
efforts, which is also known as earning through learning. (Chen et al., 2018)
Another application area, Blockchain-based Educational Institute Systems, contained

research on blockchain applications for transferring academic credits between universities.
According to the articles analyzed, the blockchain may be utilized to efficiently share
information without the involvement of third parties or intermediaries. (Loukil et al., 2021).
4.3 Opportunities of integrating blockchain technology in education

Many blockchain projects from various areas share the goal of reducing paper-based
workflows, lowering administrative expenses, and improving the efficiency of routine
procedures involving multiple parties. Arndt (2019) explains the blockchain is a technology
that allows for the creation of a tamper-proof record that is shared by a number of
stakeholders who may have competing interests and hence do not trust each other as the
sole source of information. As a result, various stakeholders can use blockchain systems
to establish safe and trustworthy records. Furthermore, by merging blockchain and smart
contracts, numerous operations involving several stakeholders may be reliably automated.
Data stored by smart contracts may be traced in this way, holding parties accountable and
resulting in a highly transparent system that can be easily validated by third parties (Garcia-
Font, 2020). By implementing the blockchain technology in education, every document can
be shared through digital media and reduces the administrative cost and creates the paperless
environment.
According to Loukil et al., (2021) adopting the blockchain to secure and verify shared
evidence can improve the education area. Because student records are saved on a blockchain,
papers such as diplomas and certificates can be eternally secured and certified, even if the
institutions that issued them closed down or the entire educational system collapsed due to
conflicts or natural disasters. Because they can verify the validity of their certificates issued
to third parties directly on the blockchain, the nature of blockchain technology can help
educational institutions save time and resources associated with transactions to confirm the
validity of their certificates issued to third parties.
Some of the reviewed articles has explained that many blockchains also support smart
contracts. This means that lectures and courses can be written into the blockchain and

189
run automatically when certain criteria are satisfied. A teacher, for example, could
assign assignments to students. The smart contracts on the blockchain may verify the
accomplishment of each task automatically. Teachers might be paid in crypto tokens for
completing all responsibilities, and pupils could be given credits. This method might be used
to lay out entire courses. (Cedeño et al., 2020)
Students, teachers, professors, and researchers produce high-quality content on a regular

basis. However, getting published is a difficult task. Science has a long history of valuable
research that has been rejected by scientific publications for a variety of reasons: however,
publishing on a blockchain could enable new writers, researchers, and others break into the
business. Blockchains may also aid in the administration of rights and the prevention of
piracy. Students and teachers who write stories, make music, documentaries, or other short
films could share their work on the blockchain. This would not only save time in finding
a publisher, but it would also defend against piracy, enhance copyright management, and
reward the author directly based on how popular or well-rated their creations are. (Cedeño
et al., 2020)
Blockchain technology also provides opportunity to create better learning platform in

educational institutions. The creation of improved online learning platforms will benefit
from blockchain technology. Universities, in particular, can create useful education systems
and programs that connect students and teachers. Schools use the education idea to improve
access to and exchange of study resources. Users purchase internal tokens in order to request
feedback from on-call online tutors. They can also access educational services and download
learning materials. (NuWire, 2021)
Tokens are earned when students on educational platforms view tutorials and invite new
members to the system. When people connect with their material, content providers earn
extra tokens.
4.4 Challenges of integrating blockchain technology in education

This challenge invited teams to articulate a vision and design pilots that empowered all
learners, unlocked lifelong learning, and improved economic mobility. In doing so, the
teams addressed various important characteristics of an ecosystem-first design approach:
• Scalability
The amount of transactions in blockchain technology is increasing every day and making
the distributed ledger bulky. In the blockchain, every node should store transaction records
and information (Zheng et al., 2017). With the increasing number of blockchain nodes in
the network, it reduces the efficiency of the algorithms and the response time of the nodes.
Although it has been said that blockchain technology is tamper-proof but still there are a lot
of cases where hackers have attacked the system so this challenge is not addressed properly
there will be a high risk of the leakage of teachers and student information. (Ma & Fang,
2020)

• Interoperability and open design

These days many organizations and industries are adopting blockchain technology and there
is a trend that they develop their systems with different characteristics. Unfortunately, there
is no universal standard to activate separate networks to communicate with each other in
blockchain technology. Blockchain interoperability refers to the capability to share and
access information across the network. This could be a challenge of blockchain technology
in the field of education where student’s sensitive data will be shared across the network.
(Malavolta et al., 2019)
• Non-technological factors
Blockchain engineers and experts
Blockchain technology is a new and emerging field and it can be found that there is still a lack
of skilled professionals, engineers, and experts on the market. With the rapid development of
blockchain applications in multiple domains, the demand for human resources of blockchain
technology is increasing (Ma & Fang, 2020). Most of the companies, either start-up or well
established are looking for blockchain developers to implement blockchain-based systems.
Nevertheless, the education field is sensitive so high-level research and development group
is needed to develop and implement blockchain technology in the higher education sector.
Because of the increasing demand on the market place blockchain professionals are very
expensive to afford for the educational institution. Skilled professionals will be a huge
challenge for an educational institution to implement blockchain technology.
• Lack of policy protection and practical experience

The majority of blockchain research now focuses on disrupting the existing finance sector,
and its use in education is very new (Liang & Zhao, 2020). Furthermore, lack of policy
protection and relevant skills provide barriers to progress. First, decentralization will
have a significant impact on traditional educational institutions due to a lack of legislative
protection and supervision. The traditional education platform incurred significant losses,
leading to a hostile attitude toward innovative applications among important institutions
and departments. Second, due to the limited number of application instances, professionals
and researchers are waiting to see what happens next and lack the drive to promote new
applications. (Chen et al., 2018)
• Trust factors
The trust factor is one of the major obstacles among blockchain users to implement blockchain
technology. Especially in the education sector trust plays a vital role to keep student's and
teacher's information securely over the blockchain network. There are two different types of
challenges related to trust. Firstly, the organizations may not be able to trust the technology
and may not trust the other organization on a distributed ledger network. (Ma & Fang, 2020)

191
• Cost
Another important factor for blockchain’s poor adoption in the education sector is that few
decision-makers in the field have a good understanding of what it is and how it may improve
the entire system. The main reason will be costs: the cost of altering the environment, setting
up the infrastructure, the cost of blockchain development, and the cost of blockchain training
for employees. It may be difficult to predict the long-term financial benefits of blockchain
integration, which include lower administration and record-keeping costs, as well as additional
gains from implementing cryptocurrency payments and rewards (Pixelplex, 2021).
5. Conclusion
The use of blockchain technology in education is still in its initial phase. As a result, a
review of current blockchain research in the field of education is required to identify specific
research gaps that should be addressed in future research. The goal of this research was
to give a thorough examination of blockchain applications in the sector of education. We
conducted a systematic literature review for this purpose. We were able to identify the
opportunities and challenges of implementing blockchain technology into education because
of our review of literatures. As a result, this analysis can help future research efforts in the
field of blockchain adoption in education overcome present solution limitations. Although
this technology is still in its early stages of development and must undergo testing, it has the
potential to spur a lot more innovation in the future. In our future work, we will introduce
tokenization of educational activity in detail. Furthermore, monetizing all of the students
activities on blockchain network will inspire students to participate in multiple activities
such as sports, attendance, and homework and so on.

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DOI: https://doi.org/10.53056/njmsr-2016001 https://www.nepjol.info/index.

ISSN (Print) : 2467-9356

Volume - IV Issue-I December 2021

An Official Publication of Global College International

NJMSR Volume IV Issue I

ISSN (Print) : 2467-9356

NEPALESE JOURNAL OF MANAGEMENT SCIENCE & RESEARCH

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With sincere acknowledgement to all for your intellectual contribution,

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viii NJMSR Volume IV Issue I

Fintech, Regtech and Suptech: Three Dimensional Approaches to Digital Finance

An Assessment of Personality-Type of Managers in Nepalese Hotel Industries

The Impact of Capital and Deposit on Financial Performance of Commercial

Impact of Porter’s Generic Strategy on Firm Performance with reference to

Impact of Right Share Issue on Share Price of Commercial Banks in Nepal

Conceptualizing Intersectionality between Work-family Conflict and Career

Empowerment of Women through Entrepreneurship Development in Emerging

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A Systematic Review on Blockchain in Education: Opportunities and Challenges

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Keywords: Digital finance, Financial literacy, Fintech, Regtech and Suptech.

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1.2 Problems concerning the technologies of financial

1.3.2 Specific objectives:

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Figure-1: Three Stage Approach to Digital Finance

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4. Results and Discussions

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4.2 The framework of fintech: Figure 2 depicts the framework of

4.2.2 Mobile wallets

4.2.4 ONLINE/Net banking

4.3 Digital currencies (D.C.s)

6 NJMSR Volume IV Issue I

4.4 Crowd funding

4.5 An overview of regtech

4.5.1 Smart contracts

NJMSR Volume IV Issue I

4.5.2 Cloud based service

4.5.3 Robo advice

4.5.4 Data analytics

4.5.5 Classification of suptech applications

4.5.6 Applications of artificial intelligence (A.I.)

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