Profitability Determinants of Private Commercial Banks in Bangladesh: An Internal Factor Analysis

Abstract

The profitability of banking sector can withstand negatively as well as contribute to bring the stability in the financial system of a country. This study attempts to analyze the impact of internal determinants on the performance of commercial banks using the pooled ordinary least square method. In analyzing the impact, the study used the return on assets, return on equity, total deposit to assets, loans to assets, equity to assets, equity to loans, interest income to assets, and investment to assets as the internal important factors which have impact on performance on commercial bank. The empirical results evidenced that capital adequacy has negative impact on profitability while the remaining all factors have positive impact on the profitability.

Keywords: Profitability of Commercial Bank; Return on Assets; Return on Equity; Correlation; Pooled Ordinary Least Square

Australian Academy of Accounting and Finance Review, vol 3, issue 3, July 2017, pp 119-128