The Effect of Capital Adequacy on Return on Investment: A Study based on Commercial Banks in Bangladesh

Md. Shohel Rana; Md. Mehedi Hasan; Shafiqul Islam

The Effect of Capital Adequacy on Return on Investment: A Study based on Commercial Banks in Bangladesh

Md. Shohel Rana * §

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Md. Mehedi Hasan

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Shafiqul Islam

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Begum Rokeya University

The Effect of Capital Adequacy on Return on Investment: A Study based on Commercial Banks in Bangladesh

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Abstract

The main purpose of study was to establish the effect that capital adequacy have on the investments. It also found at how this capital adequacy was involved in other variables such as liquidity, management efficiency, asset quality and operating efficiency. Side by side, it found at whether other variables had a role to play in the investments. In this study, the collected data were applied in empirical analysis with regression analysis to analysis. A random sample from the population of total commercial bank in Bangladesh was taken as secondary sources of data from financial statement. A linear regression model of the returns on investments versus capital adequacy, liquidity, management efficiency, asset quality, operating efficiency was to test relationship among the variables. The results established that the relationship between capital adequacy of commercial banks and return on investment is negative and significant. The study found that capital adequacy had a negative effect on return on investments while liquidity had a positive impact on the returns. For this negative effect of capital adequacy on the returns in investment, the study recommends that a central depository fund for commercial Banks be set up to assist Banks have cheaper way for short term borrowing to useful to temporary liquidity crisis.

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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.

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How to Cite This Article

Md. Shohel Rana, Md. Mehedi Hasan, Shafiqul Islam. 2019. "The Effect of Capital Adequacy on Return on Investment: A Study based on Commercial Banks in Bangladesh". Global Journal of Management and Business Research - C: Finance GJMBR-C Volume 19 (GJMBR Volume 19 Issue C7).

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GJMBR Volume 19 Issue C7

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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: F65

Submission ReceivedDecember 12, 2018
Peer Review Double Blind
Handling Editor
Accepted January 2, 2019
Published January 15, 2019

Version of record

v1.2

Issue date

December 17, 2019

Language

English

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Article Matrices

Total Score: 150

Country: Bangladesh

Subject: Global Journal of Management and Business Research

Authors: Md. Mehedi Hasan, Md. Shohel Rana, Shafiqul Islam (PhD/Dr. count: 0)

View Count (all-time): 344

Total Views (Real + Logic): 1093

Total Downloads (simulated): 91

Publish Date: 2019 01, Tue

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