Impact of Internal Factors on the Profitability of Banks: A Case of Commercial Banks in Bangladesh

Ayesha Siddiqua, A. N. M. Minhajul Haque Chowdhury, Abu Sayed Md. Mahmudul Haque Chowdhury, Md. Mainuddin and Md. Latifur Rahman
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Ayesha Siddiqua: Hajee Mohammad Danesh Science and Technology University
A. N. M. Minhajul Haque Chowdhury: Hajee Mohammad Danesh Science and Technology University
Abu Sayed Md. Mahmudul Haque Chowdhury: University of Development Alternative
Md. Mainuddin: Hajee Mohammad Danesh Science and Technology University
Md. Latifur Rahman: Hajee Mohammad Danesh Science and Technology University

Asian Business Review, 2017, vol. 7, issue 1, 7-14

Abstract: The internal factors of the bank have a great influence on the profitability of the banks. This study is an effort to disclose the effect of bank’s internal factors on return on equity (ROE), return on asset (ROA), and net interest margin (NIM) of ten selected commercial banks in Bangladesh for the period of 2011-2015. Researchers used descriptive statistics, correlation and regression analysis as statistics tools to find out the results. The findings from descriptive statistics indicate that Eastern Bank Limited was ranked first regarding profitability. The correlation test found that total equity to total asset ratio (TETA) and cost to income ratio (CIR) significantly affects the ROA whereas loan to deposit ratio had significant positive effect on the NIM of the banks. The regression analysis revealed that the independent variables of the banks were significant enough to explain the variation of the dependent variables (ROA, ROE, and NIM) of the study.

Keywords: Commercial banks; internal factors; return on asset; return on equity; net interest margin (search for similar items in EconPapers)
JEL-codes: G21 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (2)

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