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; Md. Latifur Rahman

doi:10.18034/abr.v7i1.5

Authors

Ayesha Siddiqua MBA Student, Department of Finance and Banking, Hajee Mohammad Danesh Science and Technology University, Dinajpur-5200, BANGLADESH
A. N. M. Minhajul Haque Chowdhury MBA Student, Department of Finance and Banking, Hajee Mohammad Danesh Science and Technology University, Dinajpur-5200, BANGLADESH
Abu Sayed Md. Mahmudul Haque Chowdhury Senior Lecturer, Department of English, University of Development Alternative, Dhaka-1209, BANGLADESH
Md. Mainuddin MBA Student, Department of Marketing, Hajee Mohammad Danesh Science and Technology University, Dinajpur-5200, BANGLADESH
Md. Latifur Rahman MBA Student, Department of Finance and Banking, Hajee Mohammad Danesh Science and Technology University, Dinajpur-5200, BANGLADESH

DOI:

https://doi.org/10.18034/abr.v7i1.5

Keywords:

Commercial banks, internal factors, return on asset, return on equity, net interest margin

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.

JEL Classifications: G 21

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