Cost-Based Pricing of Banking Asset: Bangladesh Perspective

Abstract

The interest rate offered by the banks against their lending and their different influencing factors are matters of immense importance for a growing economy like us. There are several factors that influence the asset price like demand for and supply of fund, cost of collecting and maintaining fund, market competition, etc. The study focuses on the status of different cost components of the asset price of commercial banks of Bangladesh. The paper is shaped to determine the asset price for scheduled commercial banks in Bangladesh and to sketch the inter-group comparison among them. It covers forty three commercial banks grouping in terms of ownership structure. The results show the average asset price of 15.97% and the state owned commercial banks are in good position in terms of cost of doing business and base rate but, they have the highest level of risk premium that squeezing the profit margin.