Impact of Firm-Specific Attributes and Macroeconomic Conditions on Performance: Empirical Evidence from Banking Sector of Bangladesh
Purpose: To explore the impact of firm-Specific attributes and macroeconomic conditions on profitability, this study has been carried out.
Methodology: Net interest margin (NIM) and return on assets (ROA) are used to measure profitability while total assets, loan deposit ratio, and capital adequacy ratio are considered to represent firm-Specific variables. In addition, gross domestic product, inflation, and real interest rate are incorporated as macroeconomic indicators. Annual reports of 19 banks listed with Dhaka Stock Exchange (DSE) have been used to collect data and the World Development Indicators (WDI) of World Bank (WB) for 2004-15. Panel data regressions i.e. fixed-effect and random-effect regressions are conducted followed by Hausman test.
Findings: Loan deposit ratio has shown significant positive impact on both profitability measures while significant negative impact was observed for real interest rate. On the other hand, significant positive impact of capital adequacy ratio has identified only on return on assets. At the end, this study has concluded that firm-specific attributes and macroeconomic conditions have significant impact on profitability (performance) in banking sector of Bangladesh.
Originality: The findings of the study will help the policymakers to know about key firm-specific variables and macroeconomic factors related with the performance of the banking sector.Keywords: Firm-Specific Attributes, Macroeconomic Predictors, Profitability, Banking Sector, Bangladesh
Almaqtari, F.A., Al-Homaidi, E.A. , Tabash, M.I. and Farhan, N.H. (2018), “The determinants of profitability of Indian commercial banks: A panel data approach” International Journal of Finance & Economics, vol. 24, pp.-168-185, https://doi.org/10.1002/ijfe.1655
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