A comparative Analysis of liquidity, solvency and profitability of State-owned Commercial Banks (SCBs) and Private Commercial Banks (PCBs) of Bangladesh

Mohammad Main Uddin, Rabiul Islam, Md. Jamal Uddin, Md. Mostafizur Rahman and Mst. Helen Parvin

International Journal of Science and Business, 2019, vol. 3, issue 6, 118-126

Abstract: This study based on analysis of liquidity, solvency and profitability between state owned commercial banks (SCBs) and private commercial banks (PCBs). To obtain the empirical results secondary data is used from the annual reports of the banks. A financial statement analysis technique especially ratio analysis is applied. The analysis is shown by different tables and graphs and interpretations are made. Under this study liquidity ratios, profitability ratios and profitability ratios are drawn. After the analysis of liquidity SCBs are higher than PCBs. Under quick ratio PCBs is higher than SCBs. Cash flows from operations ratio had a fluctuating mode in all the banks from 2013-2017 but in 2017 PCBs are better than SCBs. Under solvency ratio PCBs in better position than SCBs. Under profitability ratio the gross profit margin of PCBs is higher than SCBs, in case of net profit margin it’s fluctuating year to year and banks to banks. In case of earnings per share SCBs is far better than the PCBs. It is observed that the overall performance of commercial banks is comparatively better than state owned commercial banks. The main limitation of this study is small sample size that is only two state owned commercial banks and two private commercial banks are taken as sample. And the ratio analysis is conducted based on only 5 years’ data. This study emphasis only quantitative variables but only quantitative variables are not adequate to build an overall measurement of financial presentation. To know the liquidity, solvency, profitability of the banks, future studies may be conducted in the same contest by comparing activities of foreign commercial banks, specialized banks and banks that have started their journey currently.

Keywords: Liquidity; solvency; profitability; performance; commercial bank (search for similar items in EconPapers)
Date: 2019
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