Determinants of Profitability of Commercial Banks in Bangladesh

Rokibul Hasan Sakib and Dewan Hossain
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Rokibul Hasan Sakib: Post graduate student, Department of Accounting & information Systems, University of Dhaka, Dhaka-1000, Bangladesh

International Journal of Science and Business, 2020, vol. 4, issue 9, 1-16

Abstract: This report focuses on the determinants of profitability of 30 DSE listed Commercial banks of Bangladesh from 2010 to 2017. The analysis part of this paper includes multiple regressions to determine impact of significant variables on profitability. The findings of this paper suggests that the net interest margin ratio (NIM), Asset size (LOGA), the ratio of operating expense (OPEX) are significant against the dependent variable called Return on Equity (ROE). Interest income is main source of income for banks. The finding suggests that if asset size increases, return on equity (ROE) will decrease and if operating expense ratio increases, return on equity decreases. Additional analysis is done in return on assets (ROA) and return on operating assets (ROOA) to justify whether the results meet with the main analysis. The findings of this study suggest that commercial banks should be more careful while giving loans with diversified portfolio maintenance.

Keywords: Determinants; profitability; portfolio; performance; Commercial banks; Bangladesh. (search for similar items in EconPapers)
Date: 2020
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