The comparison among Prime Bank and other enlisted banks’ management practice of upholding provision against financial aspects

Abstract

The banking sector of Bangladesh compared to its economic size is moderately bigger than many other economies of equal level of development and per capita income. There are forty-seven commercial banks operating in this small economy. Although over the last thirty years, the country achieved noticeable success regarding the access to banking services, in 1972 population per branch was 57,700 and in the year of 2010, it was 20,162 per branch. The statistics indicates that getting banking services is not a significant problem for the country. So from the above condition we can conclude that Prime Bank as well as the other entire fourteen listed bank in Bangladesh are not maintaining the consistency in terms of provision collection. All over the operating years from 2007 to 2011 the ratio is fluctuating and inconsistent. So from this calculation we can assume that the other entire listed bank in DSE and also other non listed bank are not following the consistency in maintaining the provision in their operation life. That means here for the entire banks Discretionary Accruals are using in the financial reports. So we can assume that all the banks in our country do not maintain the consistent provision that is threatened news for our economic well being because it may leads to bankruptcy. Discretionary accruals are the result of earning management. Managers find it more flexible and attractive for the opportunity of getting incentives in the short run but it has a bad impact in the long run for the whole company and its stakeholders. So all the banks should maintain consistency in keeping provision and also look after the use of discretionary accruals in the financial reports they provide to the users. This report helps to explore my knowledge in this banking area that help me to understand more about the discretionary accruals and the necessity of the maintaining provision by the banks that will leads to a healthy financial position as a student of BBS.