ResearchPaper.pdf - 2019 Determinants of Bank Profitability...

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Determinants of Bank Profitability in Bangladesh 2019 BANK SPECIFIC AND MACROECONOMIC DETERMINATS OF BANK PROFITABILITY BASED ON THE EMPIRICAL EVIDENCE FROM BANGLADESH BANKING SECTOR Team EnvyUs INDEPENDENT UNIVERSITY, BANGLADESH.
Group Name: Team EnvyUs Group Members: Name ID Najmus Sakib 1530721 Md. Ali Ridwan 1510188 Md. Mehedi Hasan 1530260 Md. Tanvir Karim 1530553 Md. Tamim Abdullah 1530153 Course Name: Business Research Methods Course ID: BUS485 Section: 4 Submitted To: Dr. Samiul Parvez Ahmed Submission Date: April 1, 2019
i Letter of Transmittal April 1, 2019. Dr. Samiul Parvez Ahmed, Associate Professor, Department of Finance, School of Business, Independent University, Bangladesh. Plot-16, Block- B, Aftabuddin Ahmed Road, Bashundhara R/A, Dhaka-1229, Bangladesh. Subject: Submission of the research paper on the determinants of bank profitability Dear Sir, We would like to report the submission of a research paper on the determinants of the profitability of banking sector of Bangladesh as you have ordered and gave us the permission to work on. This research is an important part of our course, and we have tried our best to work on it carefully and sincerely so that we can create an informative outcome. From this, we got a remarkable amount of knowledge experience that may prove to be useful in the future. We thank you for all the support that made our paper a success and managed in accordance with our common hope. Sincerely yours, Team EnvyUs.
ii Acknowledgement The final outcome of this project required a lot of guidance and assistance from many people. Whatever we have done is only because of such guidance and assistance. We thank the School of Business of Independent University, Bangladesh for giving us the opportunity to do this project and providing us all the support and guidance we needed to complete the project. We are also grateful to our respective faculty, Dr. Samiul Parvez Ahmed, Associate Professor and Head of Department of Finance, School of Business, Independent University, Bangladesh. We express deep and sincere gratitude to him whose guidance, encouragement, suggestion and constructive criticism have contributed immensely to this report. To all family members, relatives, friends and everyone who shared their support either morally or physically, thank you. Sincerely, Team EnvyUs.
iii Table of Contents Letter of Transmittal ........................................................................................................................ i Acknowledgement .......................................................................................................................... ii Table of Contents ........................................................................................................................... iii Table Of Figures ............................................................................................................................ iv Abstract ........................................................................................................................................... 1 1. Introduction ................................................................................................................................. 2 2. Problem Statement ...................................................................................................................... 4 3. Literature Review ........................................................................................................................ 5 3.1 Performance Measure: Profitability: ..................................................................................... 5 3.2 Determinants of Bank Profitability: ...................................................................................... 5 3.2.1 Internal Determinant: Liquidity ..................................................................................... 5 3.2.2 Internal Determinant: Credit Risk .................................................................................. 9 3.2.3. Internal Determinant: Size .......................................................................................... 12 3.2.4 Internal Determinant: Capitalization ............................................................................ 15 3.2.5 External Determinant: Inflation ................................................................................... 18 4. Methodology ............................................................................................................................. 21 4.1 Descriptors of Research Design .......................................................................................... 21 4.2 Research Approach ............................................................................................................. 23 4.3 Research Objectives ............................................................................................................ 23 4.4 Conceptual Framework ....................................................................................................... 23 4.5 Hypotheses .......................................................................................................................... 26 4.5.1 Credit Risk and Profitability ........................................................................................ 26 4.5.2 Liquidity and Profitability ............................................................................................ 26 4.5.3 Capitalization and Profitability .................................................................................... 27 4.5.4 Size and Profitability .................................................................................................... 27 4.5.5 Inflation Rate and Profitability .................................................................................... 27 4.6 Sampling and Data Source

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