Determinants Bank Profitability: Empirical Evidence from Bangladesh Commercial Banks

Abstract

The paper empirically examines the impact of bank specific characteristics and macroeconomic variables in determining the banks' profitablity of Bangladesh banking industry with a panel data. A total of 42 Bangladesh commercial banks' financial reports were analyzed; and bank specific characteristics such as bank financial risk, bank operational efficiency, and bank sizes as well as macroeconomic variables such as economic growth are examined to estimate their impact of bank profits. Results indicate that bank specific factors such as loan-deposit ratio, loan-loss provision to total assets, equity capital to total assets, and operating expenses to total assets are significant factors. Bank sizes and macroeconomic variable show no impact on profits.