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Internal Factors Influencing the Profitability of Commercial Banks in Bangladesh

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  • Md. Zakir Hosen

    (Professor, Dept. of Accounting and Information Systems, Patuakhali Science and Technology University, Bangladesh)

Abstract

The profitability of commercial banks is influenced by a number of internal and external factors. This paper attempts to identify the internal factors which significantly influence the profitability of commercial banks in Bangladesh. In this study, profitability is measured by ROA and ROE which may be significantly influenced by the internal factors such as IRS, NIM, CAR, CR, DG, LD, CTI and SIZE of the bank. Data are collected from published annual reports during 2014--2018 of 23 commercial banks. Using simple regression model, it is found that CR has significant effect on the profitability and CAR has significant influence on ROA only. In addition to this, DG has significant effects on PCBs’ profitability (ROE only) where as IRS and CTI have significant influence on profitability (ROA only) of ICBs. Further, none of these variables have significant effects on the profitability of SCBs but CAR and CR are correlated with profitability (ROA only) and the causes may be the nature of services provided by SCBs to its clients. The internal policy makers should manage the influential internal factors of the banks in order to increase their profitability so that they can meet stakeholders’ expectations.

Suggested Citation

  • Md. Zakir Hosen, 2020. "Internal Factors Influencing the Profitability of Commercial Banks in Bangladesh," International Journal of Economics and Financial Research, Academic Research Publishing Group, vol. 6(7), pages 192-200, 07-2020.
    • Handle: RePEc:arp:ijefrr:2020:p:192-200
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    Cited by:

    1. Rana-Al-Mosharrafa & Md. Shahidul Islam, 2021. "What Drives Bank Profitability? A Panel Data Analysis of Commercial Banks in Bangladesh," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 10(2), pages 96-110, April.

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