Traffic Jam in Dhaka City
EXAMINATION
OF
PROFITABILITY
IN
THE CONTEXT OF
BANGLADESH BANKING
INDUSTRY
Nadim Jahangir ', Shubhankar Shill2 and Md.
Amlan
Jahid
Haque3
Abstract
Loans
are the riskiest asset of a bank, but these loans play a pivotal role in banks ' profitability. Banks 'profitability depends on the results of some parameters and among them
Bank
b
Return on Equity, Market Size, Market
Concentration Index, and Bank
RiskMeasure
are widely used and the same are investigated in the
Bangladesh Banking Industry in this study for a period of the last six years.
The
data comes from the annual reports of individual banks listed in
Dhaka Stock
Exchange (DSE) and from the Bangladesh bankb published statistics book
(Scheduled Banks Statistics). Correlation matrix and stepwise regression have been used for the purpose of data analysis.
The analysisfinds that market concentration and bank b risk do little to explain bank b return on equity, whereas bankb market size is the only variable providing an explanation for banks return on equity in the context of Bangladesh.
Introduction
The tmhtional measure ofprofitabilitythrough stockholder 's equity is quite different in banking industry ffom any other sector ofbusiness, where loan-to-deposit ratio works as a very good indicator ofbanks ' profitabiJity as it depicts the status of asset-liabilitymanagement ofbanks.
But
banks ' risk is not only associated with this asset- liability management but also related to growth opportunity. Smooth growth insures higher future returns to holders and there lies the profitability which means not only current profits but future returns as well.
So,
market size and market concentration index along with return to equity and loan-to-deposit ratio seize the attention of analyzing the banks ' profitability. The banking industry of
Bangladesh
is a mixed one comprising nationalized, private and foreign commercial banks. Many efforts have been made to explain the performance of these banks.
Understanding
the
OF
PROFITABILITY
IN
THE CONTEXT OF
BANGLADESH BANKING
INDUSTRY
Nadim Jahangir ', Shubhankar Shill2 and Md.
Amlan
Jahid
Haque3
Abstract
Loans
are the riskiest asset of a bank, but these loans play a pivotal role in banks ' profitability. Banks 'profitability depends on the results of some parameters and among them
Bank
b
Return on Equity, Market Size, Market
Concentration Index, and Bank
RiskMeasure
are widely used and the same are investigated in the
Bangladesh Banking Industry in this study for a period of the last six years.
The
data comes from the annual reports of individual banks listed in
Dhaka Stock
Exchange (DSE) and from the Bangladesh bankb published statistics book
(Scheduled Banks Statistics). Correlation matrix and stepwise regression have been used for the purpose of data analysis.
The analysisfinds that market concentration and bank b risk do little to explain bank b return on equity, whereas bankb market size is the only variable providing an explanation for banks return on equity in the context of Bangladesh.
Introduction
The tmhtional measure ofprofitabilitythrough stockholder 's equity is quite different in banking industry ffom any other sector ofbusiness, where loan-to-deposit ratio works as a very good indicator ofbanks ' profitabiJity as it depicts the status of asset-liabilitymanagement ofbanks.
But
banks ' risk is not only associated with this asset- liability management but also related to growth opportunity. Smooth growth insures higher future returns to holders and there lies the profitability which means not only current profits but future returns as well.
So,
market size and market concentration index along with return to equity and loan-to-deposit ratio seize the attention of analyzing the banks ' profitability. The banking industry of
Bangladesh
is a mixed one comprising nationalized, private and foreign commercial banks. Many efforts have been made to explain the performance of these banks.
Understanding
the
References: (2005). (1997). (1998) "A4odeling (2003). (1975). The Concept of Annual report (2000-2005): Dutch