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Unlocking Profitability: Exploring the Impact of Bank-Specific and Macroeconomic Determinants on Return on Equity in Commercial Banking Sector of Bangladesh

International journal of economics and financial issues, 2023-01, Vol.13 (6), p.107-115 [Peer Reviewed Journal]

2023. This work is published under http://creativecommons.org/licenses/by-nc-nd/4.0/ (the “License”). Notwithstanding the ProQuest Terms and conditions, you may use this content in accordance with the terms of the License. ;ISSN: 2146-4138 ;EISSN: 2146-4138 ;DOI: 10.32479/ijefi.15274

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  • Title:
    Unlocking Profitability: Exploring the Impact of Bank-Specific and Macroeconomic Determinants on Return on Equity in Commercial Banking Sector of Bangladesh
  • Author: Rumaly, Nishat
  • Subjects: Banking industry ; Earnings per share ; Macroeconomics ; Profitability, Return on Equity, Dif-GMM, PCSE, Driscoll-Kraay, Bangladesh
  • Is Part Of: International journal of economics and financial issues, 2023-01, Vol.13 (6), p.107-115
  • Description: This study investigates the factors influencing Return on Equity (ROE) within the banking sector of Bangladesh by analyzing a comprehensive dataset spanning from the year 2011 to 2020. Utilizing a combination of econometric techniques, including the one-step difference GMM, Driscoll-Kraay estimator, and Panel-Corrected Standard Errors (PCSE) methods, this study analyzes the influence of various bank-specific and macroeconomic variables. The findings reveal a nuanced pattern of impact on ROE. Earnings Per Share (EPS), Capital Adequacy Ratio (CAR), and Bank Spread exhibit a significant positive influence on ROE, reflecting the importance of profitability, capital strength, and interest rate spreads. Conversely, asset size, operating cost-to-loans ratio, total equity-to-debt ratio, and inflation exert a significant negative impact on ROE, highlighting the challenges associated with growth, cost efficiency, leverage, and inflationary pressures. These findings provide a multifaceted perspective on the dynamics of ROE, offering valuable insights for banks and policymakers striving to optimize financial performance and stability in the ever-changing economic landscape.
  • Publisher: Mersin: EconJournals
  • Language: English
  • Identifier: ISSN: 2146-4138
    EISSN: 2146-4138
    DOI: 10.32479/ijefi.15274
  • Source: ProQuest Central
    DOAJ Directory of Open Access Journals
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