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

oleh: Md. Ariful Islam, Rezwanul Hasan Rana

Format: Article
Diterbitkan: LLC "CPC "Business Perspectives" 2017-10-01

Deskripsi

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 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 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.