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Bank-Specific and Macroeconomic Determinants of Profitability of Bangladesh's Commercial Banks

Author

Listed:
  • Sufian , Fadzlan

    (Professor at IIUM Institute of Islamic Banking and Finance, International Islamic University Malaysia)

  • Kamarudin, Fakarudin

    (Faculty of Economics and Management, Universiti Put ra Malaysia)

Abstract

The study identifies bank specific characteristics and macroeconomic determinants of profitability in the Bangladesh’s banking sector over the years 2000 to 2010. The study uses relevant data fr om a sample of 31 commercial banks in Bangladesh. The determinants are identified using multiple regression analysis. The generalised least squares method has been applied consisting of fixed effect model rather than random effect model and tested by Hausman test. The results bring out five bank specific determinants that are important in influencing profitability: capitalisation, non1traditional activities, liquidity, management quality, and size of the bank. Besides, three macroeconomic determinants significantly influence profitability including growth in GDP, inflation and concentration.

Suggested Citation

  • Sufian , Fadzlan & Kamarudin, Fakarudin, 2012. "Bank-Specific and Macroeconomic Determinants of Profitability of Bangladesh's Commercial Banks," Bangladesh Development Studies, Bangladesh Institute of Development Studies (BIDS), vol. 35(4), pages 1-29, December.
    • Handle: RePEc:ris:badest:0543
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    References listed on IDEAS

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    More about this item

    Keywords

    Bank1specific Characteristics; Macroeconomics; Bank Profitability; Multiple Regression Analysis;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • N25 - Economic History - - Financial Markets and Institutions - - - Asia including Middle East

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