Determinants of bank profitability for the selected private commercial banks in Bangladesh: a panel data analysis

Article


Islam, Md. Ariful and Rana, Rezwanul Hasan. 2017. "Determinants of bank profitability for the selected private commercial banks in Bangladesh: a panel data analysis." Banks and Bank Systems. 12 (3), pp. 179-192. https://doi.org/10.21511/bbs.12(3-1).2017.03
Article Title

Determinants of bank profitability for the selected private commercial banks in Bangladesh: a panel data analysis

ERA Journal ID31194
Article CategoryArticle
AuthorsIslam, Md. Ariful and Rana, Rezwanul Hasan
Journal TitleBanks and Bank Systems
Journal Citation12 (3), pp. 179-192
Number of Pages15
Year2017
Place of PublicationUkraine
ISSN1816-7403
1991-7074
Digital Object Identifier (DOI)https://doi.org/10.21511/bbs.12(3-1).2017.03
Web Address (URL)https://www.proquest.com/docview/2221324748
Abstract

This study aims to investigate the determinants of profitability of fifteen selected private commercial banks in Bangladesh over the period 2005-2015. The study emphasizes on the internal factors that affect bank profitability. This research uses panel data to explore the impact of the nonperforming loan, cost to income ratio, loan to deposit ratio, commission fees, cost of fund and operating expenses on the profitability indicators of banks like return on asset and return on equity. The experimental outcomes have found strong evidence that nonperforming loan (NPL) and operating expenses have a significant effect on the profitability. Moreover, the results have shown that higher NPL may lead to less profit due to the provision of classified loans. Again, higher loan to deposit (LD) ratio and cost of fund contribute towards profitability, but their impacts are not significant in the private commercial banks of Bangladesh.

Keywordsbank profitability; Bangledesh
Byline AffiliationsUniversity of Dhaka, Bangladesh
University of Southern Queensland
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