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Relationship between Cashless Banking and Bank’s Profitability of Bangladesh

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  • Rony Kumar Datta

    (Department of Finance & Banking, Hajee Mohammad Danesh Science and Technology University (HSTU), Dinajpur- 5200, Bangladesh)

Abstract

Cashless banking is one of the most progressive banking policies nowadays especially in this modern era of digitalization. The quest of this study is to explore the relationship of the profitability of the bank’s industry with the cashless banking of Bangladesh. Return on Equity (ROE) and Return on Asset (ROA) have been taken as the proxy of profitability whereas transactions volume of Mobile Financial Services (MFS), Automated Teller Machine (ATM), Debit Card and Internet Banking Fund Transfer (IBFT) have been used as the proxy of cashless banking industry in Bangladesh. By collecting secondary data of seven years period from the annual report of the Central Bank of Bangladesh, this study applies a multiple regression technique to explain the relationship between bank’s profitability and cashless banking. The result shows that IBFT has a significant positive impact and ATM & Debit card has a significant negative impact on the ROE whereas MFS and IBFT has positive and Debit Card has a negative impact on the ROA of banking industry of Bangladesh. It is revealed from the findings that almost all the factors have positive/negative impact either on ROA or ROE but only IBFT have a positive and significant impact on both ROA and ROE. The findings of this study are somewhat significant for the regularity authorities and stakeholders of bank and non-bank financial institutions as well as for the academicians and government as a whole.

Suggested Citation

  • Rony Kumar Datta, 2021. "Relationship between Cashless Banking and Bank’s Profitability of Bangladesh," International Journal of Science and Business, IJSAB International, vol. 5(7), pages 21-32.
    • Handle: RePEc:aif:journl:v:5:y:2021:i:7:p:21-32
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    References listed on IDEAS

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