Thoughts on Banking and Finance, July-December, 2015
Nexus between Bank’s Liquidity and Profitability in Bangladesh : An Overview
- DOI
- https://doi.org/10.64968/bbta.tbf.2015.04.02.01
- Journal volume & issue
-
Vol. 4 Issue 2
pp. 9-32
- Authors
- Mst. Nurnahar Begum Dr. Md. Ezazul Islam
Abstract
The main objectives of the paper are to investigate the relationship between banks’ liquidity and profi tability, and the impact of liquidity on bank’s profi tability. The paper applies Ordinary Least Square (OLS) method for the sample period 1997-2014 to examine the impact of liquidity on banks’ profi tability. The paper fi nds that advance-deposit ratio which measures liquidity positively impacts banks’ profi tability. Call money rates, non performing loans (NPL) and excess liquidity- negatively impacts banks’ profi tability. The negative relationship between NPL and return on asset (ROA) is a major concern of the policymakers of the banking industry of Bangladesh.
Keywords: Liquidity, Profitability and Banking Industry
JEL Classification: G21, G28, G30, G31