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The Impact of Credit Risk Management Indicators on Profitability Attributes: Evidence from the State-Owned Commercial Banks in Bangladesh

Author

Listed:
  • Banu, Mst. Hasna

    (Rajshahi University)

  • Sayaduzzaman, Md.

    (Rajshahi University)

  • Sil, Subhash Chandra

    (Rajshahi University)

Abstract

The focal attempt of this research is to identify the consequence of credit risk management indicators on profitableness attributes of state-owned commercial banks functioning in Bangladesh. To attain the objectives of this research study researcher has analyzed four sample banks’ audited annual reports covering the period 2012 to 2016. The study has employed the ANOVA technique, multiple regression model, and correlation matrix to reach the concluding remark as per study objectives. The findings revealed that there is significant and insignificant variation as well as relationship in the different indicators of credit risk management but there is insignificant variation in the different attributes of profitability in the midst of the sample banks within the study period. Furthermore, there is the insignificant impact of the different indicators of credit risk management namely loan and advance, classified loan, unclassified loan, leverage ratio, bad debt, default ratio, cost per loan asset, and cost to income ratio on profitability attributes such as return on assets, return on equity along with net profit percentage of the sample banks over the study period. Hence, the study has recommended that the management of the banking sector should emphasize creating a smart credit management policy as well as lending guidelines to formulate the suitable credit risk management practice to meet the demand of loans applicants properly.

Suggested Citation

  • Banu, Mst. Hasna & Sayaduzzaman, Md. & Sil, Subhash Chandra, 2021. "The Impact of Credit Risk Management Indicators on Profitability Attributes: Evidence from the State-Owned Commercial Banks in Bangladesh," American Journal of Trade and Policy, Asian Business Consortium, vol. 8(3), pages 215-224.
    • Handle: RePEc:ris:ajotap:0008
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    References listed on IDEAS

    as
    1. Rahman, Md. Mostafijur & Chowdhury, Md. Razwan Hasan Khan & Islam, Md. Amirul & Tohfa, Mst. Ummay & Kader, Md. Abdul Latif & Ahmed, Alim Al Ayub & Donepudi, Praveen Kumar, 2020. "Relationship between Socio-Demographic Characteristics and Job Satisfaction: Evidence from Private Bank Employees," American Journal of Trade and Policy, Asian Business Consortium, vol. 7(2), pages 65-72.
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    Cited by:

    1. Tribhuwan Kumar Bhatt & Naveed Ahmed & Muhammad Babar Iqbal & Mehfooz Ullah, 2023. "Examining the Determinants of Credit Risk Management and Their Relationship with the Performance of Commercial Banks in Nepal," JRFM, MDPI, vol. 16(4), pages 1-23, April.
    2. Jain Mayank & Malik Taniya & Malik Sakshi, 2023. "Deciphering Financial Health and Risk: Hierarchical Relationships and Interdependencies among Key Factors," Acta Universitatis Sapientiae, Economics and Business, Sciendo, vol. 11(1), pages 162-185, October.

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    More about this item

    Keywords

    Credit Risk Management Indicators; Profitability Attributes; State-Owned Commercial Banks; Bangladesh;
    All these keywords.

    JEL classification:

    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers

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