Bangladesh Bank Training Academy Journal

Abstract: The central bank’s sound liquidity management is crucial for the stability of the financial system as well as the overall economy of any country, including Bangladesh. Identifying the core component of banks’ liquidity and its determining factors from the central bank’s point of view is important in this context. In addition, identifying the proper liquidity forecasting technique is essential for sound liquidity management. This study attempts to identify these factors with regard to Bangladesh. It is found that excess reserves (total reserves with the Bangladesh Bank minus required reserves) are the most liquid assets of banks. There are two types of determining factors for excess reserves. These are autonomous factors (net foreign assets, claims on government, currency in circulation, and net other items) and policy factors (net claims on banks and required reserves). Bangladesh Bank cannot directly control the autonomous factors, but the policy factors can be controlled through applying the monetary policy instruments like reserve ratio, repo facilities, and Bangladesh Bank bills. In this context, BB needs to know how much liquidity should be injected/mopped up from the market on a daily basis. Proper liquidity forecasting is the only way to find this idea. Therefore, the Monetary Policy Department (MPD) of BB Head Office forecasts the banks’ liquidity every morning for the next five working days. MPD basically forecasts the autonomous factors to forecast the overall liquidity situation. To forecast the autonomous factors, MPD uses the moving average method, the judgmental approach, and adjustments of seasonal and festival impacts on the trend values of these autonomous factors. This study finds the positive impacts of liquidity forecasting on liquidity management. However, to enhance the effectiveness of liquidity forecasting, this study seems to extend the forecasting horizon up to the reserve maintenance day. Regarding the forecasting technique, this study suggests that MPD should apply the econometric technique, like the ARMA model, particularly for the currency in circulation. In addition, MPD should take help from the Forex Reserve and Treasury Department of the BB Head Office and the Ministry of Finance in forecasting the net foreign assets and net claims on the government, respectively.

Citation: Sarker, M. M. I. (2025). Identifying the determinants of banks’ liquidity and analyzing its forecasting technique in the context of Bangladesh. Thoughts on Banking and Finance, 10(2), 1–18. https://doi.org/10.64968/bbta.tbf.2025.10.02.01

Abstract: This study combines theoretical understanding with empirical analysis to investigate This study combines theoretical understanding with empirical analysis to investigate the relationship between inflation and budget deficits. Applying the Autoregressive Distributed Lag (ARDL) model on annual data spanning 1990- 2023, the findings reveal a significant long-run association between fiscal deficits and inflation, indicating that sustained government budget deficits contribute to rising price levels over time. In contrast, the short-run impact of fiscal deficits on inflation is relatively weak. The analysis also reveals that real GDP growth is associated with lower inflation in the long run, whereas higher government consumption tends to exacerbate inflationary pressures. The error correction term is negative and statistically significant, suggesting a stable model. These findings underscore the importance of sound fiscal discipline and coordinated monetary-fiscal policy to maintain price stability and support long-term macroeconomic sustainability.

Citation: Mondal, M. S., Bhattacharjee, P., & Miah, M. N. (2025). Impact of budget deficit on inflation: Bangladesh perspective. Thoughts on Banking and Finance, 10(2), 19–30. https://doi.org/10.64968/bbta.tbf.2025.10.02.02

Abstract: The main objective of this paper is to explore the impact of Digital Communications on carbon emissions of the selected countries of the world. Very few studies have investigated the relationship between digital communications and carbon emissions from different perspectives. To the best of our knowledge, no previous studies have compared this effect between low- and high-income countries. This study will contribute to addressing this untapped area. More specifically, the following research questions need to be addressed: What kind of impact does digital communication have on carbon emissions, and are the effects different for low-income and high-income countries? This study selects 98 countries and divides them into different groups according to their income status from 2007 to 2021. The study used panel data techniques and reported the results obtained from Fixed Effects estimations. Data is collected from the World Bank, ITU (International Telecommunication Union). The empirical results showed that digital communication negatively and significantly affects CO2 emissions, which means more digital communication advancement will reduce carbon emissions. The findings demonstrate that the index of digital communications has a negative but insignificant influence on CO2 emissions for regions with lower income

Citation: Rapti, S. S., & Aziz, T. (2025). The effect of digital communications on carbon emission: A panel data model. Thoughts on Banking and Finance, 10(2), 31–40. https://doi.org/10.64968/bbta.tbf.2025.10.02.03

Abstract: Mobile Financial Services (MFS) represent one of the most significant innovations in the modern financial system. This study aimed to identify strategies to address the challenges faced by rural populations in Bangladesh when using MFS. In particular, it sought to understand how users can be effectively supported in overcoming these difficulties. The research adopted a primarily descriptive design and drew data from senior officials employed by MFS providers. Semi-structured interviews were conducted with six officials, who were conveniently selected from three different MFS organizations. The findings highlight ten key strategies—such as enhancing rural users’ knowledge and awareness, reducing transaction costs, introducing female agents, and ensuring interoperability among MFS providers—that can help mitigate the major challenges experienced by rural users. The implementation of these strategies has the potential to bring about positive changes in the MFS sector in developing countries like Bangladesh. Consequently, collaboration among all relevant stakeholders is essential to pursue these strategies, address rural users’ challenges, and deliver the quality of service expected from mobile financial services

Citation: Rahman, M. M. (2025). Strategies to overcome challenges of rural users regarding mobile financial services (MFS): A case of Bangladesh. Thoughts on Banking and Finance, 10(2), 41–53. https://doi.org/10.64968/bbta.tbf.2025.10.02.04

Abstract: The aim of this study is to examine the effects of Green Banking Practices (GBP) and their impacts on Environmental Awareness (EA) and Corporate Social Responsibility (CSR) Commitment, which in turn affects Environmental Performance (EP). Moreover, it explores the mediation effects of EA and CSR Commitment on GBP and EP. Through purposive sampling, 230 data were collected from banking employees of private commercial banks in Bangladesh using a quantitative research design. Initial data analysis was conducted using SPSS 26, and core analysis using Partial Least Squares Structural Equation Modelling. The results show significant associations among GBP, EA, CSR and EP; with EA and CSR have good predictive ability for EP. The findings also show mediation effects of EA and CSR in the relationship between GBP and EP. The findings of this study have both theoretical and managerial implications that could be useful for top management, policy makers and researchers willing to improve EP in emerging economies.

Citation: Shakil, R. M. (2025). Green banking practices and environmental performance: How environmental awareness and CSR commitment shape bank sustainability in Bangladesh. Thoughts on Banking and Finance, 10(2), 54–66. https://doi.org/10.64968/bbta.tbf.2025.10.02.05

Abstract: The aim of this study is to explore the determinants of inflation in Bangladesh. To do that, this study applied the ARDL model using monthly time series data on selected economic variables such as money supply, exchange rate and industrial production index data from July 2010 to June 2023. This study also incorporated the Covid-19 dummy to understand the impact of the Covid-19 pandemic on the inflation dynamics of Bangladesh. The empirical findings of this study showed that inflation has a strong positive association with the money supply in Bangladesh in the long run. Besides, the exchange rate positively affects the inflation in the short run as well in the long run. Other variables such as industrial production index and Covid-19 dummy variables were not found statistically significant during the sample period. The findings of the study have some implications for the policymakers of Bangladesh. As there exists a strong positive association between money supply and inflation in the long run implies that policymakers need to consider the long-term impacts of the amount of money supply. Moreover, there is a strong positive relationship between the exchange rate and inflation in both the long as well as short run, therefore, policymakers should also be careful in determining the exchange rate.

Citation: Faruq, M. O., & Rahman, M. A. (2025). Determinants of inflation in Bangladesh: A pre and post COVID-19 analysis. Thoughts on Banking and Finance, 10(2), 67–75. https://doi.org/10.64968/bbta.tbf.2025.10.02.06

Abstract: The purpose of this study is to find out whether forensic accounting can be implemented in the present circumstances of Bangladesh for detecting and preventing fraud. This research has taken samples of 300 people including chartered accountants, students of accounting, and teachers of accounting. This study has used regression, correlation, descriptive statistics, collinearity and heteroskedasticity analysis . This research has found out the usefulness and enough scope of implementation of forensic accounting in the present circumstances of Bangladesh. Also, the findings suggest that the shareholders of the companies will be benefited if the implementation of forensic accounting takes place. This paper is one of the very few studies in the context of Bangladesh which has examined the scope of implementation of forensic accounting to prevent and detect fraud. The result of this paper can be beneficial to the corporations for maximization their wealth.

Citation: Hera, S. M., & Ahmed, T. (2025). The scope of implementation of forensic accounting in the present circumstances of Bangladesh. Thoughts on Banking and Finance, 10(2), 76–84. https://doi.org/10.64968/bbta.tbf.2025.10.02.07

Abstract: This study examines how external balances behave in stressed economic environments. Using data from eight South Asian economies (1990-2024), we apply panel-data regression methods to test whether fiscal pressures and capital inflows affect the current account and whether these effects differ during crises. The results point to three key insights. First, external balances react more strongly to trade conditions than to fiscal pressure, as the fiscal indicator shows little influence across models. Second, changes in income matter: higher GDP per capita tends to weaken the current account in the short run but supports improvement over time as economies become more productive. Third, remittances consistently support the external balance, whereas foreign direct investment (FDI) exerts persistent pressure on the current account in both the short- and long- run. Overall, adjustment is slow; only about 15 percent of a current account imbalance corrects itself within a year, indicating that external vulnerabilities can linger. In sum, the findings suggest that structural factors and crisis exposure shape trajectories of external balance in stressed environments. This highlights the need for broader, resilience-focused macroeconomic policies.

Citation: Masud, M. R. (2025). Open-economy dynamics in a stressed environment: Macroeconomic stability and external balance behaviour in a crisis-prone region. Thoughts on Banking and Finance, 10(2), 85–96. https://doi.org/10.64968/bbta.tbf.2025.10.02.08

Abstract: This study examines the effects of AI-driven FinTech solutions on credit risk management in the retail banking of Bangladesh. Three leading commercial banks in Bangladesh- BRAC Bank Limited, Mutual Trust Bank Limited, and The City Bank Limited are selected to examine the effectiveness of credit risk management during the 2023–2024 time frame. A quantitative research design is used to analyse on loan performance, and primary survey data are collected from 150 retail borrowers of the selected banks. The study employs Partial Least Squares–Structural Equation Modeling (PLS-SEM) to test the proposed conceptual framework. The results reveal that repayment timeliness has a significant positive effect on portfolio quality, while operational cost per loan, loan default rate, and average loan processing time exert significant negative effects. Furthermore, portfolio quality is found to have a strong positive influence on credit risk management effectiveness. The findings suggest that AI-driven FinTech solutions enhance credit risk management primarily by improving borrower repayment behaviour and strengthening loan portfolio health, rather than solely through cost and speed efficiencies. The research contributes to understanding the effect of AI-driven FinTech solutions adoption in retail banking. It provides valuable insights in AI-driven digital financial technology on credit risk management for practitioners, policymakers, and educators.

Citation: Sarder, H. S., Goswami, R., & Mukherjee, M. (2025). Effects of AI-driven FinTech solution on credit risk management in retail banking: Empirical evidence from three selected banks in Bangladesh. Thoughts on Banking and Finance, 10(2), 97–109. https://doi.org/10.64968/bbta.tbf.2025.10.02.09