Economics at your fingertips  

Assessing the Relationship between Efficiency, Capital and Risk of Commercial Banks in Bangladesh

Nazmoon Akhter

International Journal of Business and Management, 2021, vol. 14, issue 1, 55

Abstract: Increased competition and problem loan in the banking sectors force banks to operate its activities more efficiently. However, bank’s efficiency, capital and risk are interrelated. The present study is made on assessing the inter-temporal relationship between efficiency, capital and risk of commercial banks in Bangladesh during the period 2011-2016 by setting simultaneous equation. The study uses three-stage least square model (3SLS) and dynamic panel generalized method of moments (GMM) model to estimate efficiency-capital-risk relationship. The study reports that both models provide consistent result regarding the relationship of bank’s operational efficiency with capital and risk and inconsistent result about the relationship between capital and risk. The study concludes that a U-shaped relationship is exited in the 3SLS model of efficiency-capital-risk relationship as banks’ operational efficiency and risk have positive relationship with capital and bank size, indicating that with increased capital and bank size, bank’s operational efficiency is improved at decreasing rate due to increase in bank’s risk.

Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link) (application/pdf) (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this article

More articles in International Journal of Business and Management from Canadian Center of Science and Education Contact information at EDIRC.
Bibliographic data for series maintained by Canadian Center of Science and Education ().

Page updated 2022-01-04
Handle: RePEc:ibn:ijbmjn:v:14:y:2021:i:1:p:55