| Author | Saklain, Sohel |
| Note | A project submitted in partial fulfillment of the requirements for the
degree of Professional Master in Banking and Finance, School of Management |
| Publisher | Asian Institute of Technology |
| Abstract | At present private commercial banks are dominant in respect of market share and profitability in the banking industry of Bangladesh. The profit growth of these banks seems to be very high. This paper seeks to examine the profitability determinants of Private Commercial Banks of Bangladesh in recent years. The study employs annual data for all the 30 Private Commercial Banks of Bangladesh for the year 2009 and 2010. Multiple regression analyses were run for each of the year to capture the significant determinants of profitability and to test some hypothesis.
The empirical findings from this study suggest that that asset size and NIM (Net Interest Margin) ratio does not have significant effect on the profitability. But the impact of non-interest income on profitability was observed as the most significant among various variables. Furthermore, investment activities, mainly in shares and debentures (quoted and unquoted) of private sectors also has a significant positive impact on ROA. The findings suggest that diversified banking activities including the investment activities make these banks more profitable.
Diversified banking activities are welcomed but if these activities include higher proportion of volatile trading activity rather than low risk income streams like fees and commission, the risk may become higher. The policy direction should be directed in such a way which will enhance the resilience and efficiency of the financial institutions with the aim of intensifying the robustness as well as stability of the banking sector |
| Year | 2012 |
| Type | Project |
| School | School of Management (SOM) |
| Department | Other Field of Studies (No Department) |
| Academic Program/FoS | Professional Masters in Banking and Finance |
| Chairperson(s) | Venkatesh, Sundar; |
| Examination Committee(s) | Juthathip Jongwanich;Sununta Siengthai; |
| Scholarship Donor(s) | Central Bank of Bangladesh; |