Date of Award


Thesis Date


Degree Type

Honors Thesis-Restricted

Degree Name



Economics and Finance

Degree Program



M. Kabir Hassan


The purpose of this paper is to examine the banking industry of Nepal from 2005 to 2010 to track the causes of banking crisis of 2011 using theories of macro-economics and finance as a conceptual starting point. In 2011, several commercial and development banks faced severe liquidity crisis that caused panic in the general public. Banks lost large amount of money in their loan and investment portfolios, which compelled the Government of Nepal to inject liquidity in the market. In the recent past years leading to the banking crisis of 2011, there was rapid change in the size and activity of banking industry. This paper analyzes changes that occurred in the financial market in the period of 2005 to 2010 that triggered the banking crisis. The roles of remittance, credit expansion and asset bubble have been analyzed in terms of their connection to the liquidity crisis.


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