Research
An Empirical Investigation of the Profitability of Islamic Banks in Bangladesh
The paper aims at investigating the effect of bank specific and macroeconomic determinants on profitability of seven Islamic banks in Bangladesh during 2003 to 2013. The study uses pool regression model and system GMM in the investigation process. The study considers ROAA, ROAE and NIM while ROAA is found more preferred profitability indicator for the Islamic banks in Bangladesh. The study reveals a robust negative effect of credit risk, loan ratio, cost efficiency and capitalization on profitability while robust positive effect bank size on profitability of the Islamic banks in Bangladesh. The study further finds that implementation of Basel II accord does not increase profitability of the Islamic bank in Bangladesh. The study suggests some significant policy recommendation in order to improve the profitability of the Islamic banks in Bangladesh.
The Effect of Credit Risk on the Banking Profitability: A Case on Bangladesh
The study aims to find the effect of credit risk on profitability of the banking sectors of Bangladesh. The study uses an unbalanced panel data and 172 observations from 18 private commercial banks from 2003 to 2013. The study uses NPLGL, LLRGL, LLRNPL and CAR as credit risk indicators and ROAA and ROAE and NIM as profitability indicators. Using OLS random effect model, GLS and system GMM the study finds a robust negative and significant effect of NPLGL, LLRGL on all profitability indicators. The analysis also finds a negative and significant effect of CAR on ROAE. As an additional analysis, the results reveal that the effect of the implementation of Basel II is significantly positive on NIM but significantly negative on ROAE. The analysis reveals some significant policy implications for increasing profitability and protecting banks from crisis.
