Factors influencing profitability in the Bangladeshi commercial banking sector

Abstract

This study explores the determinants of the profitability of commercial banks in Bangladesh, an emerging economy. Annual report data from commercial banks covering the period from 2013 to 2024 were used for the analysis. Potential determinants of bank profitability were identified based on empirical literature. Return on Assets (ROA) and Return on Equity (ROE) were used as the dependent variables. Panel regression analyses were conducted using both Fixed Effects and Random Effects models. The findings reveal a significant positive relationship between asset quality and bank performance, while capital adequacy has a significant negative relationship with performance across all baseline models.