Impact of Non-Performing Loan on Profitability of Banks in Bangladesh: A Study from 1997 to 2017

Md. Sazzad Hossain Patwary; Nishat Tasneem

Impact of Non-Performing Loan on Profitability of Banks in Bangladesh: A Study from 1997 to 2017

Md. Sazzad Hossain Patwary * §

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Nishat Tasneem

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University of Dhaka

Impact of Non-Performing Loan on Profitability of Banks in Bangladesh: A Study from 1997 to 2017

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Abstract

Bangladesh being a developing country heavily depends on the banking sector for smooth financial intermediation. Banking industry of Bangladesh has been facing the acute problem of NPL since long. This paper aims to discover the impact of non-performing loan ratio, capital adequacy ratio and provision maintenance ratio on the return on asset (ROA) of all banks based on the last twenty-one years data. This study also investigates the root causes and adverse effects of the non-performing loan. Secondary sources of data are collected from the annual reports of Bangladesh Bank and analyzed by Ordinary Least Square (OLS) method and Vector Auto Regression (VAR) model using STATA 14.2. The results of the study reveal that there are different directional short-run causality exist between variables and the OLS regression analysis confirms that two independent variables; non-performing loan ratio and provision maintenance ratio are statistically significant to the dependent variable; return on asset (ROA).

References

16 Cites in Article

Reference Format

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Funding

No external funding was declared for this work.

Conflict of Interest

The authors declare no conflict of interest.

Ethical Approval

No ethics committee approval was required for this article type.

Data Availability

Not applicable for this article.

How to Cite This Article

Md. Patwary, Nishat Tasneem. 2019. "Impact of Non-Performing Loan on Profitability of Banks in Bangladesh: A Study from 1997 to 2017". Global Journal of Management and Business Research, Global Journal of Management and Business Research - C: Finance GJMBR-C Volume 19 (GJMBR Volume 19 Issue C1).

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Journal Specifications

Crossref Journal DOI 10.17406/GJMBR

Print ISSN 0975-5853

e-ISSN 2249-4588

Keywords

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Classification

GJMBR-C Classification JEL Code: G21

Submission ReceivedDecember 12, 2018
Peer Review Double Blind
Handling Editor
Accepted January 4, 2019
Published January 15, 2019

Version of record

v1.2

Issue date

February 7, 2019

Language

English

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Article Matrices

Total Score: 149

Country: Bangladesh

Subject: Global Journal of Management and Business Research

Authors: Md. Sazzad Hossain Patwary , Nishat Tasneem (PhD/Dr. count: 0)

View Count (all-time): 273

Total Views (Real + Logic): 888

Total Downloads (simulated): 59

Publish Date: 2019 01, Tue

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Total Views: 888

Total Downloads: 59

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