The impact of research and innovation investment on Al- Arafah Islami Bank's financial performance

Abstract

Research and development activities launch and support new production, expand our understanding of the world, and present fresh perspectives on how to create and apply technology. The findings of the present study show how the performance of banks and R&D investment companies is influenced by a variety of variables. Al-Arafah Islami Bank Bangladesh was examined utilizing a descriptive research methodology and a panel regression analysis model with secondary data. The five-year period from 2017 to 2021 was covered by the study's data. We looked at the performance of seven financial variables that affect banks. The research uses return on asset and return on equity as metrics for assessing the performance of banks, and Dividend yield ratio, dividend cover ratio, price earning ratio, capital gearing ratio, research & development intensity ratio, business size ratio, and leverage ratio are some indications of research & innovation investment. The results of the panel data regression analysis showed that the banks' financial performance was negatively and statistically significantly impacted by their ratios of dividend yield, dividend cover, capital gearing, and leverage. Meanwhile, the financial performance of banks was statistically significantly benefited by the price-earnings ratio, the research-and-development intensity ratio, and the business size ratio. Nevertheless, neither the leverage ratio nor the dividend cover ratio had a statistically significant impact on the financial performance of the banks over the time period under investigation. As a result, the bank's financial performance is being positively impacted by the investment in research and innovation.