Universal Journal of Accounting and Finance Vol. 9(6), pp. 1377 - 1386
DOI: 10.13189/ujaf.2021.090616
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Determinants of Profitability in Banking Sector: Empirical Evidence from Bangladesh


Md. Abu Issa Gazi 1,*, Md. Shahbub Alam 2, G. M. Anwar Hossain 3, SM Nahidul Islam 4, Muhammad Khalilur Rahman 5, Md. Nahiduzzaman 3, Abu Ishaque Hossain 4
1 School of E-Commerce, Jiujiang University, Jiangxi, 332000, China
2 Department of Business Administration, Sonargaon University, Dhaka-1215, Bangladesh
3 Department of Finance and Banking, Islamic University, Kushtia-7003, Bangladesh
4 Department of Business Administration, The International University of Scholars, Dhaka-1212, Bangladesh
5 Faculty of Entrepreneurship and Business, Universiti Malaysia Kelantan, 16100 Pengkalan Chepa Kelantan, Malaysia

ABSTRACT

Bangladesh is a developing country. The vital role of banking sector in permanent, sustainable and continuous economic growth is undeniable. Bangladeshi banking sectors consist of private commercial banks, specialized banks, Islamic banks and public sector banks. Covering the period of 50 years banking sector Bangladesh has apparent serious changes in terms of growth of profitability and development which is the main concern of this study. The main objective of this research is to determine the factors affecting profitability in the banking sector of Bangladesh. The study attempts to investigate firms' specific factors and macroeconomics factors' impact on the profitability in the Bangladeshi banking sector. In this regard, 32 banks have been considered as sample and the scenario of these banks over the last 10 years has been observed (2011-2020). In this case, panel data research methodology has been used. OLS regression model is used to analyze data. Moreover, a general to specific modeling approach is used in this case. The result of this study reveals that both firms' specific variables (i.e. Equity to Asset Ratio, Deposit to Asset ratio, Debt to Equity Ratio, Loan to Deposit Ratio) and macroeconomic variable (GDP growth rate) have statistically significant impact on the profitability, represented by Return on Asset (ROA) and Return on Equity (ROE). All the research findings are very useful to the investors, shareholders, bank's authority, policy makers, and government for the improvement of the performance in the banking sector of Bangladesh.

KEYWORDS
Profitability, Firms' Specific Variables, OLS Model, Banking Sector, Ratio

Cite This Paper in IEEE or APA Citation Styles
(a). IEEE Format:
[1] Md. Abu Issa Gazi , Md. Shahbub Alam , G. M. Anwar Hossain , SM Nahidul Islam , Muhammad Khalilur Rahman , Md. Nahiduzzaman , Abu Ishaque Hossain , "Determinants of Profitability in Banking Sector: Empirical Evidence from Bangladesh," Universal Journal of Accounting and Finance, Vol. 9, No. 6, pp. 1377 - 1386, 2021. DOI: 10.13189/ujaf.2021.090616.

(b). APA Format:
Md. Abu Issa Gazi , Md. Shahbub Alam , G. M. Anwar Hossain , SM Nahidul Islam , Muhammad Khalilur Rahman , Md. Nahiduzzaman , Abu Ishaque Hossain (2021). Determinants of Profitability in Banking Sector: Empirical Evidence from Bangladesh. Universal Journal of Accounting and Finance, 9(6), 1377 - 1386. DOI: 10.13189/ujaf.2021.090616.