Bangladesh Bank Training Academy Journal

Abstract

The importance of nonbank fi nancial institutions (NBFIs) to the economy cannot be overemphasized. Compared to the previous year, the deposit of NBFIs rose by 36% in the year 2013. Analyzing the profi tability of non-banking institutions is the central theme of the study: it marks off the model nonbank fi nancial institutions use in Bangladesh. Evoking insight into profi tability model helps in pinning down strength and weakness, which in turn ushers to better dealing with distress condition. Thus understanding NBFI profi tability model has policy implication. Using panel data the article regresses the profi tability on assets, non-interest revenue and equity. The model accounts 90 of variability in profi ts. The eff ect of noninterest income is most pronounced among the regressors, which vouches that profi tability hinges more upon it for NBFIs and less on interest source. Size puts a negative impact on profi ts negating the the bigger the better notion, however strong the words suppoting it are. The eff ect of equity is understandably negative on ROE.