Are Larger Banks Performing Better than Smaller Banks in Bangladesh?

Abstract

This paper examines the relationship among bank size, net profit after tax and net interest income of 41 commercial banks in Bangladesh from 2012 to 2021. The study develops six hypotheses to diagnose the relationship between bank size and net profit or net interest income from the perspective of lag period data, generation wise data, and yearly data. Convenience sampling has been used, and the data is collected for the period 2012 to 2021 that considers all four generations of banks and thus the data set includes 410 firm year observations. After conducting OLS regression, it turns out that bank size positively impacts net interest income and net profit after tax. Overall, the correlation between net interest income and net profit after tax with bank size is significant revealed by examining the value of R2 and adjusted R2. We suggest testing with some other relevant variables (qualitative) which may produce some insightful thoughts and thus opens up the door of future research. Finally, it can be concluded that bank size is a self-sustaining attribute