Abstract
The Determinants of Profitability of Private Banks In Bangladesh: An Empirical Analysis
Bank efficiency has come out as a multi-dimensional concept, which has been discussed widely in the literature. Despite recent trends of financial disintermediation and growth in market-based finance, the role of banks is essential to the performance and operation of modern economies. With the change in the social and economic objectives of Commercial banks, it becomes extremely essential to access their profitability performance. An analysis of profitability and its determinants would help the policy makers to formulate policies for improving performance of these institutions. It is generally agreed that a strong and healthy banking system is a prerequisite for sustainable economic growth and maintain financial stability. The study of profits is important not only because of the information it provides about the health of the economy in any given year, but also because profits are a key determinant of growth and employment in the medium-term. As the main role of a financial system is to lubricate the gears facilitating the economic operations, this dissertation represents several determinants , for the entire period 2009-10 to 2011-12 , such as Spread ratio, Profit per employee, and Non interest income that show a positive association with profitability measured in terms of ROA. As well as Capital adequacy ratio and Operating expenses ratio bears a significant negative association with profitability measured in terms of ROA. But Credit deposit ratio, and Business Per Employee have a negative association with ROA which are not the usual case but could cause due to the bad credit, loan defaulter and high deposit collection rather than credit creation but significantly affected the bank's profitability.
Keywords
Financial system, profitability, rate on asset, private banks, emprical analysis.
