Efficiency evaluation and comparison between non-banking financial institutions and commercial banks of Bangladesh

Abstract

Within last few decades Non-Banking Financial Institutions (NBFI‟s) are operating in Bangladesh whether the Banking sector is an established financial institution. There are several types of banks have been established in our country. Say for example: Government Banks, Specialized Banks and Commercial Banks etc. NBFIs‟ have not expanded their operations to the every flock of people as the banks have been established. But recent phenomena like the rising of the rate of loan defaulter, lack of managerial control of banks have raised question about the efficiency of the banks. This report is about to compare the efficiency evaluation and compare the financial position of NBFI‟s and Commercial Banks. This report only compare the commercial banks and does not compare the Government Banks or Specialized Banks because the controversial performance of those institutions. This report is based on totally quantitative method where different financial ratios are taken as key tools of measure the financial conditions of the NBFI‟s and Commercial Banks. The NBFI‟s and Commercial Banks are randomly chosen as samples of the industries. Performance of last five years of those organizations is taken to make a separate average of each ratio for NBFIs‟ and Commercial Banking sector. Thus, putting the average financial performances of NBFIs‟ and Commercial Banks, the better positions has been decided. Which sector does well in NPL controlling, managing overall assets and equity to generate enough revenue and sells revenues are considered as more efficient financial sector in between NBFIs‟ and Commercial Banks.