The study examined the relationship between capital structure and profitability of Nepalese commercial bank for the period 2065/66 to 2074/75 using 10 sampled Nepalese commercial banks. The sample size was chosen based on net profit using stratified sampling technique. Random sampling technique was used to select the sample of banks. For empirical evaluation of the effect of CS on Profitability, The statistical techniques, Viz., Pearson’s coefficient of correlation and regression analysis in addition to descriptive statistics such as minimum, maximum, mean and standard deviation have been used during the study. The major findings of the study are as follows:
  • Debt assets ratio is inversely proportional to net profit but is directly proportional to ROE. Minimum debt equity ratio can generate better profitability of Nepalese commercial banks.
  • The average debt/equity ratio of Nepalese commercial bank over past ten years was 0.103551.
  • Based on the descriptive analysis, over the period of study, the result shows that the profitability ratios measured by ROE and Net profit averaged to 0.19479 and 1068.617 million. The capital structure variables: debt/assets ratio, debt/equity ratios, paid-up capital and total assets stood at 0.8898, .1035, 4357.8 and 59350.48 respectively. This indicates that approximately 89% of total assets are represented by debt confirming the fact that banks are highly geared institutions.
  • Through correlation analysis, it was found that capital structure decision on Debt/Asset ratio, Debt/Equity ratio, paid-up capital and total assets are significant in determining net profit. Whereas, Capital structure decision is not significant in determining ROE except for paid-up capital. The result indicates that the debt is negatively correlated with net profit. i.e. higher the debt, lower will be the profit and vice versa.
  • In care of regression analysis, all the relationship with profitability variables is rejected for the bank's size. For paid-up capital, relationship with profitability is rejected. i.e there is significant impact of paid-up capital on banks profitability. However, all the relationships with the dependent variable are accepted for D/A ratio and D/E ratio. From the regression analysis, it is clear that the bank's size has a significant negative impact on the bank's profitability. i.e higher the bank’s size lower will be the profit and vice versa. Similarly, Paid up capital also have a negative impact on profitability and impacts significantly on the profitability of Nepalese commercial banks. 

ACKNOWLEDGEMENTS
This study entitled “Capital structure and profitability of Nepalese commercial banks” is organized to fulfill the partial requirement of the Master of Business Administration under Pokhara University. I am grateful to Ace Institute of management that has provided an ample opportunity to use the theoretical knowledge in the practical field.
I would like to forward my sincere gratitude to my research supervisor Mr. Dipendra Karki for his immense support, suggestions, and co-operation to complete my research. 
contd...