Bank profitability- a study on the private commercial banks in Bangladesh

Abstract

The thesis examines the influence of bank-specific variables on bank profitability in Bangladesh for the period, 2014-2018. The sample contains data of the 13 largest private commercial banks which has been chosen on the basis of assets size. The panel data regression models are estimated using bank level annual data from the sample banks. The regression results show that interest income and capital adequacy have positive and statistically significant impact on banks’ profitability. On the other hand, increased non-performing loans (NPLs) decrease bank profitability. Therefore, bank should invest in economically viable projects. The monitoring and supervision of the loan portfolio should be strengthened to reduce default loans (NPLs) in order to increase profitability of the banks in Bangladesh. The findings of this study would help the banks’ investors, policy makers, other stakeholders and management for improving the performance and decision making of the financial institutions especially banks in coming times.