The rapid growth of the green bond (GB) market raises important questions about how environmental considerations influence investor demand in debt markets. We examine primary market demand for GB using detailed orderbook data from global corporate bond issuances, which allow us to directly observe investor demand during the issuance process. We find GB attract 12%–15% higher demand multiples, equivalent to approximately $74–$93 million for a median-sized GB issue, relative to comparable non-GB. However, this premium is conditional on both the regulatory environment and issuer environmental credibility. Specifically, elevated demand for GB is concentrated in markets with stringent sustainable finance regulations, such as the EU, and is not present in the US or other markets. At the issuer level, environmental credibility, captured by lower carbon intensity, stronger green innovation, and lower ESG-related reputational risk, is associated with significantly stronger GB demand, with these effects most pronounced within the EU subsample. These findings are robust across multiple matching approaches. Overall, our results indicate that primary market demand for GB reflects the interaction of institutional environments, issuer environmental credibility, and segmented investor demand in sustainable debt markets.

When an economy faces deep economic problems such as a recession then the conventional form of monetary policy may not work. Short-term nominal interest rates are bound by zero and lowering bank reserve rates is not possible because of risk default (Fuhrer & Madigan, 1997). Additionally, as the economy is hit by the liquidity trap, in these circumstances people are better off holding cash than investing, therefore, they accumulate the money, prolonging the problem and avoiding any economic recovery taking place. In response to the global financial crisis (GFC) of 2007-2008 use of unconventional monetary policies (UMP) has been popular in tackling melt-down among advanced economies particularly in the form of quantitative easing (QE). Use of UMP has been a debatable issue among economists considering the extent of fulfilment of macroeconomic goals and the spillover effect in the global marketplace.

Wintergreen is a wild herb that grows in the hills of Nepal that can be used for extracting oil which has several medicinal values. It is being sold into premium-value markets in the USA by doTERRA Inc. doTERRA has a co-impact sourcing partnership with the NGO Choice Humanitarian, scouts the local farmers or entrepreneurs and helps them set up the production business. The difference between the price of the final product and the price that local entrepreneurs get is very high. Despite this, the venture has created a new opportunity for local farmers to make large profit as the cost of production is low. However, the business itself has several challenges from scalability and sustainability aspects. Further, the price is set by the single buyer and the market has monopsonist characteristics; hence, the producer has less bargaining power. Despite these challenges, creating a better business environment enables the export of essential oil and that can be a potential foreign currency source for country like Nepal.

This paper explains the performance differences between A and B class financial institutions arising from credit risk. The dynamic panel data from 2008 to 2019 has been considered from all 28 commercial banks and 11 national level development banks for analysis. Arellano Bond method has been performed to control the unobserved heterogeneity and to reduce biasness in the parameter estimation as they have both cross sectional and time dimensions. The results have shown clear differences in credit risk status between A class and B class bank with all the parameters except for Return on Assets (ROA). The results show that the A class commercial banks are less vulnerable than the B class bank as measured by Standard deviation of ROA (standard deviation of return on equity (SDROE) both, yet offer substantially higher ROE and fairly higher NIM. Findings suggest that the past performance BFIs, regardless their classes, are capable enough to predict their future performance as all lag variables are significant. Development banks are advised to focus on maintaining appropriate credit to deposit ratio (CDR) as it has been affecting most of the performance indicators whereas, commercial banks are advised to monitor their loan loss provision to total loans and advances (LLPTLA) for better performance. The control variables have been found to have negligible effect on performance of banks yet higher inflation deteriorates the performance even at a small amount. Further, contradictory findings on influence of real gross domestic product (GDP) growth with the performance demands a need of further research. To recapitulate, the credit risk plays a vital role in performance of banks in Nepal and A class banks safer with returns.

This paper investigates the effectiveness of CAMELS (Capital Adequacy, Assets Quality, Management Efficiency, Earning Efficiency, Liquidity and Sensitivity to Market Risk) based supervision in risk management of A class commercial banks. The riskiness is measured by Downside Deviation (i.e., volatility of returns below minimum average return) and Standard Deviation of ROA and ROE. Using the Generalized Method of Moments (GMM) in secondary balanced panel data during major financial development (i.e., 2004 to 2018; BASEL-I-II-III) of all 28 commercial banks of Nepal; causal relationship between supervision and risk management has been investigated. The result shows that the commercial banks in Nepal can reduce their downside deviation as well as standard deviation of ROA and ROE by reducing the Non-Performing Loan (NPL), maintaining appropriate liquidity and by increasing management efficiency. Further, results justifies the relevance of risk based supervision adopted by central bank and interest spread set. However, increased capital base has not helped in reducing riskiness of banks. Overall, the study finds that among the six parameters of supervision (i.e., CAMELS), five parameters (i. e., AMELS in the priority order of AMLSE) are capable enough to reduce the riskiness of commercial banks if maintained strictly as guided by the central bank.

This paper investigates asymmetric oil price pass through on inflation in Nepal using time series data of 331 months from April 1987 to February 2018. The paper applies Nonlinear Autoregressive Distributed Lag (NARDL) model to estimate long run and short run asymmetric adjustment of refined petroleum products on Consumer Price Index (CPI). Finding shows presence of long run asymmetric adjustment between price of all petroleum products and CPI. However, when the model is controlled for monetary impact and price level of India, only the price of diesel is found to have long run asymmetric pass through into inflation. The long run cointegrating equation shows unit rise in price of diesel is accompanied by small contraction in CPI in long run by -0.048 units. Meanwhile unit fall in price of diesel is shown to have positive long run pass through in CPI by 0.431 units. This apparent anomaly could be attributed to fact that with rise in price of diesel, demand for cheaper adulterant like kerosene increases thus resulting in fall in CPI Similarly, fall in unit price of diesel could have overall increased industrial demand and other resources which in turn led to significant increase in CPI. Meanwhile, study didn’t find any significant asymmetry in short run between CPI and petroleum products. However, in short run a significant impact on the CPI by actual size of increased price of Petrol and Diesel has been found. Hence, in short run, it shows that it is the size of price increase in Petrol and Diesel; not the price itself that has significant effect on the CPI. Since petroleum products in Nepal are not priced by market, these findings can provide guidelines for future oil pricing in reducing the spillover impact on general price level.

Repos and reverse repos are popular money market management tools used by the Central Bark of Nepal especially to manage liquidity crunches and surpluses which may arise from time to time. However, the evidence of the actual impact of these tools in correcting the money market is somewhat contested. This paper investigates the impact of repos and reverse repos on interbank bon-owing rates in the Nepalese market using a longitudinal data set from 2007 to 2016. The paper uses an iterative approach for identifying the best model to explain the phenomenon. The main finding of this research is that the money market maturity period of repos is more significant in reducing interest rates during a liquidity crunch rather than the volume of repos issued. Further, the research also finds that reverse repos are not significant enough to mop-up excess liquidity in the market. These findings can provide guidelines for monetary policy in Nepal, insofar as the issuance of repos and reverse repos is concerned.