Banking sector reform and its effects on the performance of commercial bank in Bangladesh

Abstract

Bank is very old institution that is contributing towards the development of any economy as well as plays a vital role of financial intermediary of a country. Bank is treated as an important service industry in modern world. But due to globalization and free market economy, this industry is facing severe competition in Bangladesh, and implementation of the clauses of WTO will further increase this competition. This research plan is to investigate the major reforms undertaken in the banking sector of Bangladesh; the affect of banks overall service quality, product quality, and to evaluate their impact on the financial development and individual performances of the banks. Development of financial system is measured by financial deepening, competitiveness and profitability within banking sector. Individual performance of the banks are measured by “Capital Adequacy, Asset Quality, Management Efficiency, Earning Performance and Liquidity” of the banks. The study reveals that the financial system in Bangladesh has been developed to some extent. However, we observe a mixed result for different types of banks in case of performance evaluation of the banks. While the local banks failed to achieve satisfactory improvement, the foreign banks were able to improve their performance considerably perhaps for having strong and efficient management, and additional compliance with the policy, guidelines, standards issued by their head office.