An Empirical Analysis on Liquidity Management of Commercial Banks in Bangladesh: A Comparative Study Between State-Owned and Private Commercial Banks

Abstract

This study attempts to analyze and compare the liquidity position of major ten private commercial banks and major five state own commercial banks in Bangladesh. In Bangladesh where the conventional banks require maintaining 18% of their deposits as Statutory Liquidity Requirement (SLR) there will be an impact on liquidity of such a ratio. As we know, the number of state-owned banks in Bangladesh is 6 where as the number for private commercial banks is 40 with more new banks to join the numbers. For this research, a random sample of 10 banks from Private commercial banks and 5 state-own banks are taken, the individual liquidity risk ratio, D/E ratio, I/A ratio, bank size, liquidity asset and ROE is tracked. The variables as a whole in F-test are found to be significant with a 5% AND 10% significance level. Individually all the variables in both sectors of banking are found to be significant except for Liquidity risk in state-owned banking.