Evaluation of Financial Performances of Commercial Banks in Bangladesh

Abstract

Bangladeshi banking sector is a mixed sector which includes nationalized, private and foreign commercial banks. Several efforts have been taken to explain the effectiveness as well as financial performance of these banks. To understand the performance of a bank, the relationships between variables such as Return on Assets (ROA), Return on Equity (ROE), Price Earnings Ratio (PER), Loan Deposit Ratio (LDR), Current Assets (CA) & Capital Adequacy Ratio (CAR) need to be known so that analysts can get the true banking performance of the banking sector.

The first chapter describes the introduction part of the study. We also use panel data model, the panel data model has been implicated to evaluate the impact of independent variables (PER, LDR, CA, and CAR) on the financial performance (ROA and ROE) analysis of Bangladeshi banks. The report is to analyze the financial performance of twenty (20) commercial banks of Bangladesh using the data set from 2014-2018 so that the report can portray the current picture of the commercial banking sector. The second chapter is the review of the literature that makes it easier for any reader who reads the report may get the proper understandings of the financial terms used in the report and also discuss variable specification. The third chapter is the analysis and findings of the report where descriptive statistics, correlation matrix are being analyzed through the variables mentioned above and also tested the hypothesis where Ho hypothesis is rejected and H1 hypothesis accepted. In model of ROA, I found that loan-deposit has significant influence on performance evaluation of commercial banks. But in ROE mode, no variable has been found statistically significant to influence the performances of banks.