Profitability determinants of banks in Bangladesh.

Abstract

Bank plays a significant role in our country. The profit & loss of banks can affect country’s economy. Past few years study has shown that in Bangladesh Islamic banks are the best in profitability. So This study investigated basically the determinants of profitability of 10 conventional banks of Bangladesh .Specifically this examine the effects of firm specific factors (Loan, Loan to asset rato,Operating efficiency , Asset management ,Gearing ratio, Cost to income ratio, Capital level of bank) & economic factors (GDP, Inflation) on profitability determined by ROA,ROE& NIM. The findings of this study contribute towards a better understanding of financing performance in banking industry of Bangladesh. Where ROA coefficient Result shows that LOANTA, Operating efficiency, CAPTA are negatively related with profitability. Whereas Loan, Asset management, Gearing ratio, Cost to income ratio, GDP & Inflation are positively related with profitability. ROE coefficient Result shows that LOANTA, Operating efficiency, CAPTA & GDP are negatively related with profitability. Whereas Loan, Asset management, gearing ratio, Cost to income ratio & Inflation are positively related with profitability.NIM coefficient Result shows that Operating efficiency, Gearing ratio & Inflation are positively related with profitability Whereas Loan, LOANTA, CAPTA, Asset management Cost to income ratio & GDP are negatively related with profitability.