Unlocking Profitability: Exploring the Impact of Bank-Specific and Macroeconomic Determinants on Return on Equity in Commercial Banking Sector of Bangladesh
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...
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| Format: | Article |
| Language: | English |
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EconJournals
2023-11-01
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| Series: | International Journal of Economics and Financial Issues |
| Subjects: | |
| Online Access: | https://econjournals.com/index.php/ijefi/article/view/15274 |
| _version_ | 1797630751998476288 |
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| author | Nishat Rumaly |
| author_facet | Nishat Rumaly |
| author_sort | Nishat Rumaly |
| collection | DOAJ |
| 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.
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| first_indexed | 2024-03-11T11:12:34Z |
| format | Article |
| id | doaj.art-895fa7d1689d4a1d891755bee26e288f |
| institution | Directory Open Access Journal |
| issn | 2146-4138 |
| language | English |
| last_indexed | 2024-03-11T11:12:34Z |
| publishDate | 2023-11-01 |
| publisher | EconJournals |
| record_format | Article |
| series | International Journal of Economics and Financial Issues |
| spelling | doaj.art-895fa7d1689d4a1d891755bee26e288f2023-11-11T13:07:16ZengEconJournalsInternational Journal of Economics and Financial Issues2146-41382023-11-0113610.32479/ijefi.15274Unlocking Profitability: Exploring the Impact of Bank-Specific and Macroeconomic Determinants on Return on Equity in Commercial Banking Sector of BangladeshNishat Rumaly0Department of Finance and Banking, Jashore University of Science and Technology, Bangladesh. 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. https://econjournals.com/index.php/ijefi/article/view/15274Profitability, Return on Equity, Dif-GMM, PCSE, Driscoll-Kraay, Bangladesh |
| spellingShingle | Nishat Rumaly 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 Profitability, Return on Equity, Dif-GMM, PCSE, Driscoll-Kraay, Bangladesh |
| title | Unlocking Profitability: Exploring the Impact of Bank-Specific and Macroeconomic Determinants on Return on Equity in Commercial Banking Sector of Bangladesh |
| title_full | Unlocking Profitability: Exploring the Impact of Bank-Specific and Macroeconomic Determinants on Return on Equity in Commercial Banking Sector of Bangladesh |
| title_fullStr | Unlocking Profitability: Exploring the Impact of Bank-Specific and Macroeconomic Determinants on Return on Equity in Commercial Banking Sector of Bangladesh |
| title_full_unstemmed | Unlocking Profitability: Exploring the Impact of Bank-Specific and Macroeconomic Determinants on Return on Equity in Commercial Banking Sector of Bangladesh |
| title_short | Unlocking Profitability: Exploring the Impact of Bank-Specific and Macroeconomic Determinants on Return on Equity in Commercial Banking Sector of Bangladesh |
| title_sort | unlocking profitability exploring the impact of bank specific and macroeconomic determinants on return on equity in commercial banking sector of bangladesh |
| topic | Profitability, Return on Equity, Dif-GMM, PCSE, Driscoll-Kraay, Bangladesh |
| url | https://econjournals.com/index.php/ijefi/article/view/15274 |
| work_keys_str_mv | AT nishatrumaly unlockingprofitabilityexploringtheimpactofbankspecificandmacroeconomicdeterminantsonreturnonequityincommercialbankingsectorofbangladesh |