| Summary: | Abstract This research is one of the few studies that examine the association of bank-specific determinants and macroeconomic factors with profitability in the banking industry of a developing country. This paper evaluates how bank-specific factors and macroeconomic determinants affect the profitability of commercial banks in Bangladesh. This study demonstrates that bank-specific factors and macroeconomic determinants are crucial catalysts in ensuring financial institutions' continuity and stable performance. The paper uses return on assets (ROA) as a proxy of bank profitability. The study also employs a group of explanatory variables, such as bank-specific determinants, which include capital adequacy (CAD), bank branches, asset management, deposit (DEP), and assets quality. The paper also considers gross domestic product, inflation rate (IF), exchange rate (EXR), and stock traded as macroeconomic variables. Pooled, fixed, and random effects models and unit root tests are employed on panel data for 24 commercial banks listed in Dhaka stock exchange from 2014 to 2020. The study results indicate that all bank-specific factors except CAD and DEP affect ROA statistically significantly. The paper also shows that among the macroeconomic determinants, IF has a significant and positive effect on ROA, while EXRTE significantly negatively impacts bank profitability. The findings of this paper are limited to the banking industry in Bangladesh, and it will provide valuable insights for future studies. Graphical abstract
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