Banking Industry Of Bangladesh Research Articles

Effectiveness of internal auditing from the lens of internal audit factors: empirical findings from the banking sector of Bangladesh

Purpose This study aims to assess the impact of determinants on the effectiveness of internal audit (IA) within the banking industry of Bangladesh. Design/methodology/approach The data was obtained through 152 survey questionnaires from a total of 43 privately owned and six state-owned commercial banks in Bangladesh. The analysis was conducted using structural equation modeling. Findings The findings demonstrate that the independence of internal auditors and the quality of IA substantially impact enhancing the efficiency of IA. On the other hand, the competence of internal auditors and management support in IA functions do not significantly impact the effectiveness of IA. Practical implications The study’s findings may have significant policy implications for the government, regulators, internal auditors, management committees and other stakeholders in establishing programmes to enhance the efficacy of IA as a component of banking audit management reforms. Originality/value This study makes three distinct contributions to the existing literature. Firstly, previous literature focused on the determinants affecting the external audit efficiency of the public companies and banking sectors in Bangladesh (Hasan, 2018; M. M. U. Reza, 2021). In this study, the author enhances the research by presenting empirical findings on the IA effectiveness of banks. Secondly, the author expands the research by incorporating both private and state-owned commercial banks as samples. Thirdly, the study is unique given that it investigates the effectiveness of IA in response to the recent financial scandals in the banking industry of Bangladesh (The Daily Star, 2023).

Legal and Regulatory Frameworks For Sharī’a Governance Practices in the Islamic Banking Industry of Bangladesh

This paper aims to explore the regulatory arrangements for sharī’a governance practices in the Islamic banking industry of Bangladesh and to identify the issues and challenges faced in this regard. Despite notable advancements, the necessity for a more robust regulatory framework, separate from the modified Banking Companies Act of 1991, which currently integrates Islamic banking regulations, remains apparent. A conspicuous challenge lies in the lack of a dedicated department within Bangladesh Bank responsible for overseeing Islamic banking activities. The article suggests an independent government-supervised Sharī’a board. This study enhances Bangladesh's Islamic banking regulation and promotes an understanding of sharī’a governance. The research is based on the review of existing literature but lacks empirical evidence. It has been stated in previous studies that a survey method can be used to examine real scenarios. This paper discusses the effectiveness of the Islamic Law Rules in the current practices of Islamic banks in Bangladesh, shedding light on their deficiencies.

Are board attributes and ownership structure value relevant in developing economies: new institutionalist perspective

PurposeThe author aims to find value relevance of board characteristics and ownership structures in the banking industry of Bangladesh, an emerging economy with absence of good governance.Design/methodology/approachPooled Ordinary Least Square (OLS), fixed effect and generalized method of moments (GMM) methods have been utilized to analyse 5-year data of 28 listed banks.FindingsAll governance indicators except institutional ownership have insignificant impact on return on asset (ROA) and return on equity (ROE). Institutional ownership has significant negative impact indicating that institutional investors can worsen bank performance in unregulated environments. Additional analysis shows significant positive impact of higher institutional ownership ratios.Research limitations/implicationsSmall sample from a single industry of one country may limit the applicability of the findings to all developing economies.Practical implicationsDuring the fast growth periods of developing economies, institutional investors with small stakes may become value destructive due to speculative behaviour.Originality/valueThis is one of the pioneering studies to suggest that governance mechanisms have insignificant, in some instances adverse, impact on firm value in emerging economies.

Human resource accounting disclosure (HRAD) practices: Evidence from banking industry in Bangladesh

The study investigates 28 banks listed on the Dhaka Stock Exchange's degree of human resource accounting disclosure standards. The study took into account a two-step procedure to gauge the extent of HRA disclosure in the annual reports of each distinct bank for each year: Building the human resource accounting disclosure index and grading the disclosure items are the first two steps. The data were analyzed using descriptive statistics, tabulation, and graphical representation. The outcome shows that banking organizations' accounting disclosures for human resources are still in their infancy. Standard, Southeast, and Mercantile Banks collectively disclose the most HRA information, while ICB Islamic Bank Ltd. discloses the least information. The study has the implication for current professional practice and is an important addition to existing literature in the arena of human resource accounting disclosure.

Green Banking Practices by Financial Institutions: A Study on the Banking Industry of Bangladesh

Green Banking Practices by Financial Institutions: A Study on the Banking Industry of Bangladesh

Impact of Bank Liquidity and Macroeconomic Determinants on Profitability of Commercial Banks in Bangladesh

This paper aims at investigating the relationship between profitability and liquidity of the State-Owned Commercial Banks of Bangladesh. An important motive of this study is to provide valuable insights into how liquidity influences profitability. There are various research papers on liquidity exposure and the profitability relationship of banks in Bangladesh. But those researches are separately conducted for conventional or Islamic banks or there is a comparative analysis of both banks. But there is little research on the state-owned banking industry. During the Pandemic the banking industry of Bangladesh was affected severely in respect of liquidity risk and it also affected its profitability. There is no recent paper focused on this study. So, this study will try to identify the significant factors that affect the liquidity of a bank and its profitability. In this regard, 10 years’ data from Annual Report of the State-Owned Commercial Banks and macroeconomic data from Bangladesh Bank website and several journals have been collected from 2012-2021. This study primarily aims at exploring the liquidity-profitability relationship using econometric model. Loan to Deposit ratio is used measuring liquidity of a bank. Other control variables Loan Loss Provision to Total Asset (LLPTA) for credit risk, Equity to Total Asset (EQTA) for capital efficiency, Operational expense to Total Asset (OPEXTA) for operational efficiency, Total Asset (TA) for Bank size, Non-performing Loan (NPL) for asset quality, Gross Domestic Product (GDP) for economy size, Inflation (INF) for consumer price index, Interest Rate (INT) for opportunity cost, and the Unemployment rate for measuring labor force. The major finding of this study show that there is a significant positive relationship between liquidity risk and profitability. Among bank-specific variables credit risk, capital efficiency, and bank size have a significant relationship with Profitability which also supports the theory. Macroeconomic variables like interest rate, inflation rate, and GDP have a significant relationship with profitability which also supports the theory. Here BDBL and BASIC should have maintained the liquidity standard mentioned by Bangladesh Bank and BIS to mitigate their liquidity crisis. This study also shows that there is no severe effect of the COVID pandemic on the State-Owned Commercial Banks of Bangladesh. The findings of this study will provide valuable insights for banks and regulators to make informed decisions regarding risk management, liquidity decision, capital allocation, and strategic planning.

Corporate Governance Enhances the Performance of Financial Institutions: A Comparative Study on Banking Industry of Bangladesh

Corporate Governance refers to the manner by which organizations are administered and to what reason. It distinguishes who has power and responsibility, and who simply decides. Corporate Governance has become visible noticeably over the world particularly in business regions like banks, NBFIs, insurances, administrative bodies, and autonomous bodies. This study intends to critically notice the exhibition of financial institutions improved by ensuring great corporate governance and what are the deterrents holding behind to accomplish it. From this examination we can gather that, various sorts of financial scams and advance defaulting hampering the business enormous. We had compared information gathered from 20 banks including both conventional and Islamic bank contrasting year 2020 with year 2022 recorded and controlled under Bangladesh Bank's administration. The corporate governance practices in Bangladesh have been largely limited to financial Sector and the Banking sector can serve as a motivation for better corporate governance through its requirements and procedures for approving and monitoring loans. These results suggest that better corporate governance mechanisms are imperative for every banking company and should be encouraged for the interest of the investors and other stakeholders as well as company’s both financial & operational activities.

Empirical study of the impact of liquidity risk on the financial performance: A study of selected commercial banks in Bangladesh

As liquidity risk is affecting the banking industry of Bangladesh, the study aims to analyze the impact of liquidity risk on financial performance of selected commercial banks in Bangladesh. The study applied a descriptive research design and targeted 20 commercial banks in Bangladesh, with secondary data collected over the span of five years from 2014 to 2018 and analyzed by employing the panel regression analysis model. Nine factors affecting financial performance of selected commercial banks in Bangladesh were selected and investigated. In the study, Return on Asset (ROA) and Return on Equity (ROE) are used as bank performance measurement tools and Non-Performing Loan ratio (NPLR), Capital Adequacy ratio (CAR), Capital to Total Asset ratio (CTAR), Loan to Deposit ratio (LTD), Loan to Total Asset ratio (LTA), Deposit to Asset ratio (DTA), Cash to Deposit ratio (CDR), Liquidity Coverage ratio (LCR), and Net Stable Funding ratio (NSFR) are used as liquidity risk indicators. The result of panel data regression analysis showed that NPLR, CAR, LTD, and DTA had negative and statistically significant impact whereas, LTA, CTAR, and LCR had positive and statistically significant impact on the financial performance of selected commercial banks in Bangladesh. However, CDR and NSFR had no statistically significant impact on financial performance of the chosen banks for the sample period. Therefore, it has been identified that the liquidity risk is negatively affecting the financial performance of the selected commercial banks in Bangladesh.

CUSTOMER ATTITUDES TOWARDS THE USE OF MOBILE BANKING APPLICATIONS OFFERED BY PRIVATE BANKS IN BANGLADESH

This qualitative study explores the attitudes of customers towards the use of mobile banking applications offered by private banks in Bangladesh. The study aims to investigate perceived usefulness, ease of use, trust and security concerns, and the benefits of using mobile banking applications. Data was collected through interviews with 40 participants, and the findings were analyzed to identify common themes and patterns. The results indicate that the majority of participants perceive mobile banking applications as useful in facilitating their banking transactions and find them easy to use. Participants also express trust in the security measures implemented by the banks. Additionally, customers value the benefits of using mobile banking applications, including convenience, time-saving, and accessibility. These findings align with previous research and highlight the importance of designing user-friendly applications that offer tangible benefits to customers. Trust and security are crucial factors that influence customer adoption and continuance intention towards mobile banking applications. The study emphasizes the need for strong security measures and transparent communication to build customer trust. The practical implications of the findings suggest that private banks should focus on designing user-friendly and secure mobile banking applications. Effective marketing and communication strategies should highlight the convenience and time-saving benefits of using these applications. Addressing technical issues, improving user experience, and strengthening security measures are essential to promote wider adoption and enhance customer satisfaction. It is important to acknowledge the limitations of this study, as the findings are specific to the context of private banks in Bangladesh. Future research should explore customer attitudes in different contexts and include non-users of mobile banking applications to gain a broader understanding of the factors influencing adoption. Alternative data collection methods could also provide more nuanced insights. This study provides valuable insights into the attitudes of customers towards mobile banking applications in the private banking industry of Bangladesh. The findings can inform the design and implementation of mobile banking applications and contribute to the growing body of literature on mobile banking adoption.

Environmental and Social Performance of the Banking Industry in Bangladesh: Effect of Stakeholders’ Pressure and Green Practice Adoption

The concepts of Stakeholders’ Pressure (SP), Environmental Performance (EP), and Corporate Social Performance (CSP) are well established in the business of progressive firms. However, firms are yet to examine the effects of Stakeholders’ Pressure (SP) on environmental performance (EP) and Corporate Social Performance (CSP) by connecting the missing linkage of Green Practice Adoption (GPA). The present study explored the association between Stakeholders’ Pressure (SP), Environmental Performance (EP), and Corporate Social Performance (CSP) through the mediating effect of Green Practice Adoption (GPA). The study’s objective was to determine the factors to propose a model for the environmental and social performance of the banking industry in the Bangladesh context. The study assessed the hypotheses using partial least squares-based structural equation modeling with data from 540 line managers from 30 private commercial banks. The results indicate that SP significantly improves EP, CSP, and GPA. On the other hand, GPA showed a substantial accepted effect on EP and CSP. Furthermore, mediation analysis showed that GPA mediates the relationship between SP with EP and CSP. This research fills the gap in the domain of the Environmental and Social Performance of the Banking Industry in Bangladesh. From this study, the academicians may get fresh antecedents of the environmental performance management approach. Thus, the study’s outcomes may give valuable insights to policymakers and managers and provide them with practical evidence to proactively implement SP in firms because such practices positively impact EP and CSP through the mediation of GPA. This result may improve operational efficiency and provide firms with a superior reputation.

Impact of Effective Performance Appraisal Systems on Employee Motivation and Retention in Private Banking Industry of Bangladesh

Aims: Healthy economic development requires properly managing the banking industry of any country. Along with state-owned banks, private banks play a critical role in the country's economy. Managers in all types of banks now confront the same challenge: how to get the utmost output from their employees. Therefore, Performance appraisal appears to be inevitable since it set the standard for comparing actual performance to established objectives and recommending practical solutions that help the organization achieve sustainable growth. Therefore, the purpose of this research is to determine the effect of performance appraisal on employee motivation and retention.
 Place and Duration of Study: The study was conducted in the private banking industry of Bangladesh between November 01, 2022, to March 30, 2023. The study duration was determined based on the scope of the research project and the availability of time and resources to complete it within the designated timeframe.
 Methodology: A random sampling method was used to conduct the study through a structured questionnaire among 110 employees from various private banks. Questionnaires were used to collect quantitative data, which was then analyzed using the Statistical Package for Social Sciences (SPSS) 25.0 software.
 Results: Major findings of the study indicate that performance appraisal is critical for employee motivation and employees perceived performance appraisal as a fair procedure, which increased their motivation and retention. Compensation and reward, and feedback are also perceived positively by the employees, which motivate them to stay in the banks.
 Conclusion: There is a recommendation that banks should review the appraisal process regularly, improve the feedback policy, introduce an effective reward system, provide the opportunity to employees for career development and empowerment, and maintain a participative environment.

THE SIGNIFICANCE OF CUSTOMER SERVICE IN ESTABLISHING TRUST AND ENHANCING THE REPUTATION OF THE BANKING INDUSTRY IN BANGLADESH

This qualitative research study examines the significance of customer service in establishing trust and enhancing the reputation of the banking industry in Bangladesh. The research aims to gain insights into the current state of customer service, its impact on customer trust and the reputation of banks, the challenges faced in providing good customer service, and the strategies that can be adopted to improve customer service practices. Data collection involved in-depth interviews with both customers and employees of a prominent banking institution in Bangladesh. The evaluation of the current state of customer service revealed a mixed picture, with customers generally reporting satisfaction but also identifying areas for improvement such as delays and inadequate facilities. The research findings confirmed the vital role of customer service in building and maintaining trust. Positive customer service experiences were found to enhance customer trust, while negative experiences had a detrimental impact and could lead to customer attrition. The reputation of banks was closely tied to the quality of customer service, as positive experiences resulted in favorable recommendations while negative experiences harmed the bank’s image. Challenges faced by banks in providing good customer service included limited resources, technological integration, communication channels, cultural barriers, and effective complaint management. To address these challenges, strategies such as enhanced staff training, leveraging technology, implementing feedback mechanisms, streamlining complaint handling, fostering a culture of personalized service, and monitoring service quality were recommended. The findings of this research provide valuable insights and recommendations for banks in Bangladesh to improve their customer service practices, enhance customer satisfaction, and ultimately strengthen their reputation in the competitive banking industry. By prioritizing customer service and implementing the recommended strategies, banks can build trust, retain customers, and establish a positive reputation, leading to sustained success in the dynamic banking landscape of Bangladesh.

Disclosures for slavery accounting concerning SDG 8 and corporate attributes: a study on the banking industry of Bangladesh

With the continuous adoption of sustainable development goals by all countries, there is a rising demand for implementing and disclosing related information by companies. This paper aims to find an idea about the nature of reporting practices related to slavery by listed banking companies of Bangladesh and the relationship between reporting practice and organizational attributes. Existing literature provides the foundation of this study. Annual reports from 2016 to 2021 were collected from the company websites, and content analysis was used to determine the nature and extent of slavery reporting; an index was developed based on content analysis. Independent variables were determined based on the current literature review. Statistical tools, including the test of multicollinearity, heteroscedastic, correlation, and linear regression and panel data analyses were used to determine the fitness of the model and the impact of independent variables on the dependent variable. Content analysis showed a clear picture of the consciousness about slavery accounting as all of the companies reported a minimum of three components of selected targets from SDG8. The evidence says that the quality and quantity of slavery reporting are improving yearly. A satisfactory correlation was found among the variables. Some variables, such as ownership nature, Board Size, etc., have a positive impact, and insignificant impact was found for Age and leverage on slavery disclosure. This paper only examines the banking industry, and it assesses only a few targets of SDG 8. Thus the results obtained from the study may not be similar to other companies. Data collection also has limitations; our target was to study till 2022 but some information requirements of few companies were not available on websites. This research paper is the first attempt to determine the nature of slavery accounting in Bangladesh. It will encourage business organizations to extend their reporting on slavery and SDGs.

Insights and Field-level experiences of Non-Performing Loans in Bangladesh: The Case of State-Owned Commercial Banks (SOCBs)

The banking industry of Bangladesh has been facing the most turbulent times of its history due to myriad forms of challenges. The crippling scenario has been contributed by multifarious reasons among others, corrupt loan practices and connected-party lending (i.e., lending to board members’ firm), lack of monitoring, supervision and inefficiencies of board members especially in state-owned commercial banks, monopolization of banks by certain industrialist groups, unprecedented political interferences and non-existent punitive measures for miscreants by the highest regulatory body i.e., Bangladesh Bank. All these reasons coupled with recent implication of single-digit interest rate are putting the banking industry into vulnerable state and thereby losing the trust and confidence of the mass-people. The excessive volume of NPL will possibly jeopardize the profitability of banks and erode the accumulated capital which might lead to the systematic risks of bank failures in the days to come. To this backdrop, the authors intend to shed some lights with a deeper look on the origin and effects of NPL based on a sample of 200-survey respondents and endeavored to explore industry-insights which might be of special interests to bank owners, managements bodies, regulator i.e., Bangladesh Bank (BB) and finally the shareholders. Journal of Business Studies, Vol. XLII, No. 1, April 2021 Page 151-174

Effect of managers ethical behaviour and organisational ethics on performance: a case of banking industry of Bangladesh

Effect of managers ethical behaviour and organisational ethics on performance: a case of banking industry of Bangladesh

Factors Affecting Liquidity Risk of Banks: Empirical Evidence from the Banking Industry of Bangladesh

Factors Affecting Liquidity Risk of Banks: Empirical Evidence from the Banking Industry of Bangladesh

Phenomenon of bank scams in Bangladesh: Analysis on behavioral issues

The primary purpose of this research study is to reflect on financial anomalies, especially bank scams in Bangladesh. This study is an empirical approach developed through a well-structured Likert-scaled questionnaire to indicate different human behaviors, psychologies, and emotions that considerably impact financial incongruities in Bangladesh. The proposed model supported the structural equation model (SEM) and used SPSS Amos (Version 24) to build an attitudinal and behavioral model that reflects the complex relationships segment of this paper. Results show people try to rationalize irrational, unethical, and impertinent things and issues to achieve self-gain. Furthermore, corporations are treated as an entity for which they cannot be punished. Apart from this, human natures like greediness, dissatisfaction with what people have, societal status, possession and position, competition with peer groups for luxury, and tendency to imitate bad things are also responsible for bank scams in the Bangladeshi economy. Last but not least bad loan and default culture developed in the banking industry of Bangladesh only lacks execution laws, rules, and regulations.

Profitability, marketability, and CSR disclosure efficiency of the banking industry in Bangladesh

Using the Data Envelopment Analysis (DEA) approach, this study measures the profitability, marketability, and corporate social responsibility (CSR) disclosure efficiencies from 2012 to 2021 of listed banks in Bangladesh. The results show that Bangladeshi banks are, on average, inefficient in terms of all efficiencies, profitability (0.703), marketability (0.56), and CSR disclosure (CSRD) (0.903) over the sample period. Further, the study compared the three efficiencies between Islamic and conventional banks and found that conventional banks are more efficient than Islamic banks in terms of profitability and marketability at 5% and 8%, respectively, while, in terms of CSRD efficiency, Islamic banks are by 1% more efficient than conventional banks. Furthermore, ordinary least square (OLS) regression has been used to investigate the impact of financial constraints, political connections, and Shari'ah regulations on firm efficiencies. The results showed that financial constraints negatively impact the firms' all three efficiencies, while political connections and Shari’ah regulations negatively affect the banks’ marketability efficiency. The findings advocate more compliance with corporate regulation and considerable contributions to CSR, leading to increased stakeholder loyalty and improved efficiency of banks. The findings provide insight for the banks’ management to improve their efficiency level, investors and depositors to make proper judgments about their investment, and clients to compare among banks for better decision making. In addition, academicians and researchers have necessary insight from the DEA's noble use in Bangladesh's banking sector.

Earnings manipulation behavior in the banking industry of Bangladesh: the strategical implication of Beneish M-score model

PurposeThis study aims to determine the number of companies involved in earnings manipulation. Additionally, this study has empirically investigated the common manipulation items among the companies.Design/methodology/approachBangladesh's listed commercial banks are selected as a sample for this study, and financial data from 2009 to 2018 were collected. The likely and nonlikely manipulator Beneish model (1999) divides the sample into two groups. Based on the M-score of the model, the banks are put into two groups. To identify the most influential variables, an independent samplet-test was done with the help of Statistical Package for Social Sciences (SPSS).FindingsThe findings show that banks in Bangladesh have an unstable trend in making manipulated financial reports. Results of thet-test reveal that overstating revenues, increasing intangible assets, lessening cost and accruals are the most appealing items for preparing a fraudulent financial report. The findings of this research work will help the investors take the right decision having the idea of manipulation in the banking sector of Bangladesh.Originality/valueIn the presence of many irregularities in the banking sector Bangladesh, very few studies have been carried out in forensic accounting and fraudulent financial reporting practices. Much research has focused on earnings management techniques. This research specifically focuses on identifying earnings manipulation in financial statements for micro-level variables like accounting accruals, intangible assets, etc. This will help policy-makers and financial statement readers to be proactive while reading financial statements and taking any investment decision.

Impact of Talent Management on Employee Performance in the Banking Industry of Bangladesh

The purpose of this study is to investigate the impact of adopting talent management strategies on employees and to know to what extent it can benefit developing, retaining or increasing the performance of the employee of the banking industry in Bangladesh. This research adopted a quantitative survey research design and respondents received a pre-coded close-ended questionnaire by using 5-points Likert scale. The questionnaire was set in Google form for the ease of online survey and also a hard copy questionnaire was made to survey employees of different banks. The statistical population sample size was 83 employees from the banking industry. Responses to the questionnaire were recorded and analyzed using SPSS 20.0 version for Windows. For investigating, measuring and analyzing the variables used in the questionnaire the researcher used descriptive methods such as frequency distribution as well as inferential methods such as correlation, and regression tests. Key results showed that talent management impacted the performance of the employees of the banking industry in Bangladesh. The results also showed that there is a potential correlation between talent retention, talent management strategies in the implementation of employee performance. But the talent retention and acquisition have no significant coefficient impact on the employee performance. Investigator recommended that the banking industry provide training for its employees, review and improve human resources policy, and reward employees for excellence. The study completes providing directions for future research. Keywords: Talent Management, Retention, Development, Employee Performance, Banking Industry . DOI: 10.7176/EJBM/14-14-05 Publication date: July 31 st 2022