The Hindu concept of caste system prevailed in Nepal under the Mallas. The civil code frame by Jayasthiti Malla divided the society into different castes, based on the occupatio0n of the people. Hindus and Buddhists lived in peace and harmony in the society. The Buddhists had adopted the Hindu way of life. Those who engaged in metal works were called 'Bandas' and 'Udasas' and the farmeres were called the 'Jyapus'.
The people were very fond of festivals. The political instability and changes in the kingship did not hamper in the performance of the festivals. The people found pleasure in religious ceremonies, dances and chariot-festivals. Some of the well-known dances were, Mahakali dance, Lakhe dance, Hari Siddhi dance, Kartik dance etc. The Jatra festivals like Kankeswwari Jatra, Indra Jatra, Gai Jatra, Bisket Jatra, Bhoto Jatra, etc. originated during the Malla period. THe kings as well as the people, took party with great interest and enthusiasm in these Jatras. The Durga Puja, Sithi Nakha, Gathamugal, Janai Purnima, etc. were also celebrated as great religious festivals. On the days of the festivals, the people as well as the kings, used to visit the holy places of pilgrimage and take holy bath in the rivers.
There was a system of Joint famaily in the Malla period. The head of the family was called 'Thakali'. It was a patriarchal society. The women were not given status equal to men. Only the sons could inherit the paternal property. A child marriage system was present, but there was no widow-marriage and re-marriage of a woman in the high caste. Men were allowed to keep as many wives as they could maintain. There was also the system of Satee.
The people were economically sound under the Mallas. Agriculture was the main occupation of the people. In the fertile valley, they grew rice, maize, sugarcane, fruit, vegetables, etc. The kings helped the farmers by digging canals for irrigation. Jayasthiti Malla divided the land into four classes on he basis of their production and location, which also determined their value and the land revenue. All the lands of the country belonged to the king. Kings often gave land as 'Birta' to Brahmins and officials who could please them. Such lands were exempted from revenue. There was no 'Zamindari' system during the reign of Malla kings.
Trade, commerce and cottage industries also flourished under the Mallas. Different occupations of the people, according to their castes, introduced by Jaysthiti Malla, created interest for their respective works. Standard weights and measures were fixed. There were different denominations of coins like, dam, suki, mohar, etc. for commercial transaction which fostered trade.
Customs and land revenue were the main sources of income of the government. There were no big industries. However, cottage industries for making utensils, ornaments, arms and ammunitions, cloth weaving, art and handicraft stone, metal and wood carving were flourishing.
Nepal had trade relations with India and Tibet. Onions, soyabeans, pots and images of brass were the main exports to Tibet and herbs, salt, tufts of yak-tails, and gold and silver were the important commodities imported from Tibet. SImilarly, Nepal exported to India, herbs, hide, wood, metal works, woollen cloth, rugs and blankets. Goods like spices, salt, silk-cloth, etc. were imported from India. Nepalese coins were also used as legal tender in Tibet.
Towards the end of the Malla rule in Nepal, the economic condition deteriorated. When the Malla kings engaged in wars and internal struggle for power they started using the wealth of the Kingdoms. They even plundered the fund of shrines and temples. When Prithvi Narayan Shah occupied the neighbouring territories and blockaded the imports and exports of the valley, it caused a great economic crisis.