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Impact of Internal Factors on the Profitability of Banks: A Case of Commercial Banks in Bangladesh

Author

Listed:
  • Siddiqua, Ayesha

    (Hajee Mohammad Danesh Science and Technology University)

  • Chowdhury, A. N. M. Minhajul Haque

    (Hajee Mohammad Danesh Science and Technology University)

  • Chowdhury, Abu Sayed Md. Mahmudul Haque

    (University of Development Alternative)

  • Mainuddin, Md.

    (Hajee Mohammad Danesh Science and Technology University)

  • Rahman, Md. Latifur

    (Hajee Mohammad Danesh Science and Technology University)

Abstract

The internal factors of the bank have a great influence on the profitability of the banks. This study is an effort to disclose the effect of bank’s internal factors on return on equity (ROE), return on asset (ROA), and net interest margin (NIM) of ten selected commercial banks in Bangladesh for the period of 2011-2015. Researchers used descriptive statistics, correlation and regression analysis as statistics tools to find out the results. The findings from descriptive statistics indicate that Eastern Bank Limited was ranked first regarding profitability. The correlation test found that total equity to total asset ratio (TETA) and cost to income ratio (CIR) significantly affects the ROA whereas loan to deposit ratio had significant positive effect on the NIM of the banks. The regression analysis revealed that the independent variables of the banks were significant enough to explain the variation of the dependent variables (ROA, ROE, and NIM) of the study.

Suggested Citation

  • Siddiqua, Ayesha & Chowdhury, A. N. M. Minhajul Haque & Chowdhury, Abu Sayed Md. Mahmudul Haque & Mainuddin, Md. & Rahman, Md. Latifur, 2017. "Impact of Internal Factors on the Profitability of Banks: A Case of Commercial Banks in Bangladesh," Asian Business Review, Asian Business Consortium, vol. 7(1), pages 7-14.
    • Handle: RePEc:ris:asbure:0029
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    Citations

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    Cited by:

    1. Md. Ahsan Ullah & Subrata Deb Nath & Munna Rani Biswas, 2020. "Impact of bank-specific internal factors on the profitability of state-owned commercial banks in Bangladesh," Indian Journal of Commerce and Management Studies, Educational Research Multimedia & Publications,India, vol. 11(2), pages 24-32, May.
    2. Salami Abdulai Agbaje & Uthman Ahmad Bukola, 2018. "Bank Capital, Operating Efficiency, and Corporate Performance in Nigeria," Acta Universitatis Sapientiae, Economics and Business, Sciendo, vol. 6(1), pages 61-87.

    More about this item

    Keywords

    Commercial banks; internal factors; return on asset; return on equity; net interest margin;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

    Statistics

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