| dc.description.abstract | The main objective of the study is to measure the determinants of Islamic banking profitability in Bangladesh. I used eight commercial banks offering Shariah-based banking services in full fledge in Bangladesh in the study. Standard Bank Ltd and Global Islamic Bank were excluded as these two came into Islamic banking operations in 2021. The paper uses three profitability measures: ROA, ROE, and NIM. Capital adequacy ratio, Credit risk ratio, liquidity ratio, operational efficiency ratio, and bank size were used as bank-specific variables GDP growth rate, interest rate, and the inflation rate was used as macro-economic variables. The paper applied a panel effect regression model. The results found that only the capital adequacy ratio significantly affects the ROA of Islamic banks in Bangladesh. No other variable has been found significant to explain the profitability of Islamic banks in Bangladesh. In the case of the ROE model, Credit risk (LLPTL), operational efficiency, and bank size significantly influence ROE. The result for the profitability indicator NIM shows that credit risk (LLPTL), liquidity, operational efficiency, and bank size affect NIM significantly. From the macroeconomic variable perspective, it has been found that only the inflation rate significantly affects net interest margin but others variables remain insignificant. | en_US |
