NON-PERFORMING LOAN AND ASSET UTILIZATION OF BANKS: EVIDENCE FROM BANGLADESH

Mohammad Ziaul Islam, Shormin Aktar, Mohammad Awal Hossen and Mohammad Mohammad Saiful Islam
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Mohammad Ziaul Islam: Leading University, Bangladesh
Shormin Aktar: Leading University, Bangladesh
Mohammad Awal Hossen: Jessore University of Science and Technology, Bangladesh
Mohammad Mohammad Saiful Islam: Leading University, Bangladesh

Romanian Economic Business Review, 2018, vol. 13, issue 4, 31-39

Abstract: The purpose of the research paper is to investigate the impact of non-performing loan (NPL) on return on asset (ROA) of banks in a least developed country as Bangladesh. The research employs a sample size of 40 consisting of the data of non-performing loan ratio against return on asset ratio for last 10 years (2008-2017) generated from four categories of banks namely- State Owned Commercial Banks (SCBs), Specialized Banks (SBs), Private Commercial Banks (PCBs) and Foreign Commercial Banks FCBs). The paper provides empirical evidence that non-performing loan has significant impact on return on asset of Bank. This study will help the policy makers to maintain desired level of NPL ratio for ensuring ROA targeted by the bank. This research seems to be the first attempt to address such an issue in the context of Bangladesh because most of the literature shows impact of NPL on profitability only ignoring the issue of asset utilization of banks.

Keywords: State Owned Commercial Banks (SCBs); Specialized Banks (SBs); Least Developed Country (LDC); Return on Assets (ROA); Money Market (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (1)

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