Determinates of Banks’ Profitability: A Study on Islamic Banks in Bangladesh
Md. Mahbub, Alam
Intan Maizura, Abdul Hamid
Sohel Rana, S. M.
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Banks and financial institutions are the heart of the economy of a country. Though Bangladesh is a developing economy, a significant number of financial institutions are in operation now in the country. The present study tried to find out the factors that determine the profitability of Islamic banks in Bangladesh. For the purpose of the study, five Islamic Banks in Bangladesh have been taken as the samples. Only the internal factors of banks’ profitability have been taken into consideration in this study. Profitability has been measured in terms of Return on Equity (ROE) and Return on Asset (ROA). In model I the findings indicate that asset management has a significant impact on the profitability of Islamic banks in Bangladesh. On the other hand, price earnings ratio and bank size are negatively correlated in terms of Return on equity with the profitability of Islamic banks in Bangladesh. Capital adequacy ratio and operating efficiency are positively correlated with the profitability of Islamic banks. On the other hand in model II it was found that price earnings ratio, operating efficiency and bank size are negatively correlated with return on equity in terms of profitability of Islamic banks in Bangladesh. But asset management and capital adequacy are positively correlated with Return on Equity in terms of profitability of Islamic banks.