Impact of Basel III on Profitability & Capital Adequacy of Private Commercial Banks in Bangladesh and Banking Generation Wise Implementation Status of Basel Accord in Bangladesh

Abstract

Nowadays it becomes paramount to keep a vigilant eye on the capital adequacy, liquidity, and risk management functions of the banks in order to ensure prudential governance. One single globally accepted solution for this is to be compliant with the principles of Basel Accords. Basel Implementation has greater consequences in the context of the banking industry of Bangladesh. On one hand, fortified capital and liquidity requirements helping the banking system of Bangladesh to be stabilized and safer, on the other side, it is somewhat expensive for banks to hold extra capital and to be more liquid. This study attempts to reveal the implementation status of Basel III by generation wise banks in Bangladesh. Furthermore, an analysis has been conducted to divulge the impact of implementing Basel III on the profitability and capital adequacy of banks. Nine (9) Private Commercial Banks, from different generations, have been considered to determine the linkage between the financial performance and Basel Standards. The gap among the generation wise banks in implementing Basel Standards also been addressed in the study.