Bank-specific and Macroeconomic Determinants of Profitability: A Study on Commercial Banks of Bangladesh Jesmin Ara, Mahbuba Aktar, Ayrin Sultana, Rony Kumar Datta, & Ashrafuzzaman Sohag

Bank-specific and Macroeconomic Determinants of Profitability: A Study on Commercial Banks of Bangladesh

Author (s)

Jesmin Ara, Mahbuba Aktar, Ayrin Sultana, Rony Kumar Datta, & Ashrafuzzaman Sohag

Abstract

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The current study is analyzing various factors that determine the profitability of a bank. More importantly, this article has tried to evaluate the relationship between bank-specific and macroeconomic variables with banks profitability. To quantify the profitability of the banking industry of Bangladesh, Return on Equity (ROE) and Return on Assets (ROA) are used as dominated variables. Independent variables are IRS, CAR, NIITA, CR, LTD, DG, SIZE, GDP, INF and NETWORK. Relevant data comes from 30 Bangladeshi commercial banks. Panel data regression result describes Capital Adequacy Ratio (CAR), Total Assets (SIZE) and Inflation (INF) has a positive association with bank profitability in Bangladesh. Credit Risk (CR) has the highest influences on the dependent variables and Non-interest Income to Total Assets (NIITA) has the lowest. The study provides guidelines to the goal setters of financial institutions. It provides a direction for the governing body to formulate and improve relevant policies and the outcomes suggest that banks should manage credit risk and utilize deposits in more productive segments of the economy of the country to ensure sustainable benefits.

 Keywords: Interest rate spread, Bank, Profitability, Bangladesh, Panel data.

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Title: Bank-specific and Macroeconomic Determinants of Profitability: A Study on Commercial Banks of Bangladesh
Author: Jesmin Ara, Mahbuba Aktar, Ayrin Sultana, Rony Kumar Datta, & Ashrafuzzaman Sohag
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.4723630
Media: Online
Volume: 5
Issue: 7
Acceptance Date: 26/04/2021
Date of Publication: 27/04/2021
PDF URL: https://ijsab.com/wp-content/uploads/768.pdf
Free download: Available
Page: 127-135
First Page: 127
Last Page: 135
Paper Type: Research Paper
Current Status: Published

Cite This Article:

Jesmin Ara, Mahbuba Aktar, Ayrin Sultana, Rony Kumar Datta, & Ashrafuzzaman Sohag (2021). Bank-specific and Macroeconomic Determinants of Profitability: A Study on Commercial Banks of Bangladesh. International Journal of Science and Business, 5(7), 127-135. doi: https://doi.org/10.5281/zenodo.4723630

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About Author (s)

Jesmin Ara(corresponding author), Assistant Professor, Department of Finance and Banking, Hajee Mohammad Danesh Science and Technology University, Dinajpur, Bangladesh. Email: jesmin.fib@hstu.ac.bd

Mahbuba Aktar, Assistant Professor, Department of Finance and Banking, Hajee Mohammad Danesh Science and Technology University, Dinajpur, Bangladesh.

Ayrin Sultana, Assistant Professor, Department of Finance and Banking, Hajee Mohammad Danesh Science and Technology University, Dinajpur, Bangladesh.

Rony Kumar Datta, Assistant Professor, Department of Finance and Banking, Hajee Mohammad Danesh Science and Technology University, Dinajpur, Bangladesh.

Ashrafuzzaman Sohag, BBA (Major in Finance), Department of Finance and Banking, Hajee Mohammad Danesh Science and Technology University, Dinajpur, Bangladesh.

 

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DOI: https://doi.org/10.5281/zenodo.4723630

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