Performance Evaluation of Banking Sector in Bangladesh

Abstract

Bank is a very old institution that contributes to any economy’s development and plays a vital role as a country’s financial intermediary. Bank is treated in the modern world as a major service industry. But this industry is facing severe competition in Bangladesh because of globalization and free market economy and the implementation of world trade organization clauses will further increase this competition. This research plan is to evaluate the performance of banking sector in Bangladesh and the impact of banks overall quality of service, product quality and their impact on banks financial development and individual performance. It was prepared to fill in the BBA program requirement. I had a great opportunity to learn about many banks and their financial position while making this report. This report helps me familiarize myself with many financial mechanisms. The theoretical part of the report concerns our country’s banking sector performance. Financial system development is measured in the banking sector by financial deepening, competitiveness and profitability. Individual bank performance is measured by banks “Capital Adequacy, Asset Quality, Management efficiency, Earning performance and liquidity”. Bangladesh financial system consists of three broad fragmented sectors: formal, semi-formal, informal. The sectors were categorized according to their regulatory degree. The formal sector comprises all regulated institution such as banks, non-bank financial institutions, insurance companies, capital market intermediaries such as brokerage houses, merchant banks etc. The study reveals to some extent that Bangladesh’s financial system has been developed. However, in case of bank performance evaluation, we observe a mixed result for different types of banks. While local banks have failed to achieve satisfactory improvement, foreign banks have been able to significantly improve their performance for strong and efficient management and additional compliance with their head offices policy, guidelines, standards.