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Association between Interest Rate Changes and Profitability of Commercial Banks of Bangladesh Samia Nur Jui, Rokibul Hasan Sakib & Md. Abu Rafsan

Association between Interest Rate Changes and Profitability of Commercial Banks of Bangladesh

Author (s)

Samia  Nur Jui, Rokibul Hasan Sakib & Md. Abu Rafsan

Abstract

Commercial banks play a crucial role in the context of modern business world. Being financial intermediaries, banks effectively contributes to the economic growth of our country. The relationship between changing interest rates and its impact on bank’s profitability has become a sensitive fact of having paramount importance. A comprehensive study has been conducted by using 5 consecutive years’ data (2014-2018) of all the 30 listed commercial banks of Bangladesh. The secondary data was collected from annual reports of corresponding commercial banks. This study represents the association and effect of interest rate changes on bank’s profitability. It also shows empirical charts, graphs regarding analyzing data and communicating results. This report has been divided into seven chapters for the convenience of preparation. Descriptive analysis, linear regression analysis, multivariate analysis, analysis of variance, correlation analysis, multicollinearity test and durbin-watson test have been carried out to establish and explain the relationship between stated two facts. It is derived from the study that change in Interest rate has significant impact on the profitability of commercial banks. Interest rate spread positively impact the profitability measures of the study (ROE, ROA, and NIM).

 Keywords: Interest rate change, Profitability, Bank rate, Commercial banks, Bangladesh.

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Title: Association between Interest Rate Changes and Profitability of Commercial Banks of Bangladesh
Author: Samia  Nur Jui, Rokibul Hasan Sakib & Md. Abu Rafsan
Journal Name: International Journal of Science and Business
Website: ijsab.com
ISSN: ISSN 2520-4750 (Online), ISSN 2521-3040 (Print)
DOI: https://doi.org/10.5281/zenodo.3965681
Media: Online
Volume: 4
Issue: 9
Acceptance Date: 28/07/2020
Date of Publication: 29/07/2020
PDF URL: https://ijsab.com/wp-content/uploads/587.pdf
Free download: Available
Page: 17-37
First Page: 17
Last Page: 37
Paper Type: Research Paper
Current Status: Published

Cite This Article:

Samia  Nur Jui, Rokibul Hasan Sakib & Md. Abu Rafsan (2020). Association between Interest Rate Changes and Profitability of Commercial Banks of Bangladesh. International Journal of Science and Business, 4(9), 17-37. doi: https://doi.org/10.5281/zenodo.3965681

Retrieved from https://ijsab.com/wp-content/uploads/587.pdf

 

About Author (s)

Samia  Nur Jui, Post graduate student, Department of Accounting & information Systems, University of Dhaka, Dhaka-1000, Bangladesh.

Rokibul Hasan Sakib (corresponding author), Post graduate student, Department of Accounting & information Systems, University of Dhaka, Dhaka-1000, Bangladesh.

Md. Abu Rafsan, Post graduate student, Department of Accounting & information Systems, University of Dhaka, Dhaka-1000, Bangladesh.

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DOI: https://doi.org/10.5281/zenodo.3965681

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Determinants of Profitability of Commercial Banks in Bangladesh Rokibul Hasan Sakib and Dewan Azmal Hossain

Determinants of Profitability of Commercial Banks in Bangladesh

Author (s)

Rokibul Hasan Sakib and Dewan Azmal Hossain

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.

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Title: Determinants of Profitability of Commercial Banks in Bangladesh
Author: Rokibul Hasan Sakib and Dewan Azmal Hossain
Journal Name: International Journal of Science and Business
Website: ijsab.com
ISSN: ISSN 2520-4750 (Online), ISSN 2521-3040 (Print)
DOI: https://doi.org/10.5281/zenodo.3965656
Media: Online
Volume: 4
Issue: 9
Acceptance Date: 26/07/2020
Date of Publication: 29/07/2020
PDF URL: https://ijsab.com/wp-content/uploads/586.pdf
Free download: Available
Page: 1-16
First Page: 1
Last Page: 16
Paper Type: Research Paper
Current Status: Published

Cite This Article:

Rokibul Hasan Sakib and  Dewan Azmal Hossain (2020). Determinants of Profitability of Commercial Banks in Bangladesh. International Journal of Science and Business, 4(9), 1-16. doi: https://doi.org/10.5281/zenodo.3965656

Retrieved from https://ijsab.com/wp-content/uploads/586.pdf

 

About Author (s)

Rokibul Hasan Sakib (Corresponding author), Post graduate student, Department of            Accounting & information Systems, University of Dhaka, Dhaka-1000, Bangladesh

 Dewan Azmal Hossain, Department of Accounting & Information Systems, University of   Dhaka, Dhaka-1000, Bangladesh. ORCID iD: https://orcid.org/0000-0002-2311-6941

 

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DOI: https://doi.org/10.5281/zenodo.3965656