Banking Sector Of Bangladesh Research Articles

Determinants of Profitability in Banking Sector: Empirical Evidence from Bangladesh

Bangladesh is a developing country. The vital role of banking sector in permanent, sustainable and continuous economic growth is undeniable. Bangladeshi banking sectors consist of private commercial banks, specialized banks, Islamic banks and public sector banks. Covering the period of 50 years banking sector Bangladesh has apparent serious changes in terms of growth of profitability and development which is the main concern of this study. The main objective of this research is to determine the factors affecting profitability in the banking sector of Bangladesh. The study attempts to investigate firms' specific factors and macroeconomics factors' impact on the profitability in the Bangladeshi banking sector. In this regard, 32 banks have been considered as sample and the scenario of these banks over the last 10 years has been observed (2011-2020). In this case, panel data research methodology has been used. OLS regression model is used to analyze data. Moreover, a general to specific modeling approach is used in this case. The result of this study reveals that both firms' specific variables (i.e. Equity to Asset Ratio, Deposit to Asset ratio, Debt to Equity Ratio, Loan to Deposit Ratio) and macroeconomic variable (GDP growth rate) have statistically significant impact on the profitability, represented by Return on Asset (ROA) and Return on Equity (ROE). All the research findings are very useful to the investors, shareholders, bank's authority, policy makers, and government for the improvement of the performance in the banking sector of Bangladesh.

Do the Attributes of Audit Committee Explain Non-Performing Loans? Evidence from an Emerging Economy

This study examined whether various attributes of the audit committee of listed banks in Bangladesh explain the level of non-performing loans (NPLs). This study used a panel data set comprising all 30 listed banks with 250 bank-year observations for the period 2013–2017. It employed the random-effects GLS regression model with cluster robust standard error and AR (1) disturbance to examine the effect of several audit committee attributes on NPLs. We found that holding audit committee meetings frequently and a higher number of independent members in the audit committee facilitate to reduce NPLs. We, however, find no explicit evidence that the other attributes of the audit committee examined (audit committee size, financial experience and financial literacy of the audit committee members, professional qualifications of the audit committee Chairman) contribute in reducing NPLs. The findings will be useful for policymakers of the banking sector in Bangladesh and the relevant regulatory bodies in enabling them to understand the role of the various attributes of the audit committee in the incidence of NPLs. Keywords: attributes, audit committee, non-performing loans (NPLs), listed banks, Bangladesh

The Relationship between Bank Specific Characteristics and the Extent of Disclosure: Evidence from the Banking Sector in Bangladesh

The fundamental motive of this study is to inspect the extent of disclosure of the banking companies in Bangladesh. To calculate the disclosure score of each sample bank, the un-weighted disclosure index has been used. To reveal the findings of this study, researchers have considered five conventional private commercial banks. A period of five years ranging from 2013 to 2017 has been selected for the study. Data have been collected from secondary sources and different statistical techniques like descriptive statistics as well as regression analysis with the respective models have been employed. The study reveals that the average disclosures scores of the sample banks are at a satisfactory level and the significant variation doesn’t exist in the disclosure scores among the sample banks. Multiple regression analysis has been conducted to know whether the significant relationship is available between the extent of disclosure and the specific characteristics of banks and the evidence confirm that the significant relationship is existing between the extent of disclosure and earnings per share, return on assets as well as net profit but not between the disclosure scores and capital adequacy ratio, debt-equity ratio, current ratio, loan deposit ratio, market capitalization ratio as well as total assets.

TQM Implementation and Its Effectiveness in Private Commercial Banks in Bangladesh

Total Quality Management (TQM) has a key role to make an effective, wellbeing finance and financial market. The main objective of the study is to investigate the TQM model implementation and its effectiveness in private commercial banks in Bangladesh. The study also finds out impact of TQM on organizational development, employee management and their job satisfaction and service improvement for customer from the private commercial banks. The study is imperial in nature. Data has been collected from the secondary source with an unstructured interview process. Then a model has been developed for justifying TQM implementation in the private commercial banking sector in Bangladesh. The study finds out that the banks which have used the TQM model are sustainable and profitable rather than those who are not using it. Finally, the study recommends some key suggestions for private commercial banks to implement the TQM model.

The impact of social media marketing activities on brand equity in the banking sector in Bangladesh: the mediating role of brand love and brand trust

PurposeThis research aims to explore the impact of social media marketing (SMM) activities on brand equity (BE) in the banking sector in Bangladesh. Moreover, brand love and brand trust are examined as a mediator of SMM activities and BE.Design/methodology/approachData were collected from a total of 289 banking customers in Bangladesh through a structured questionnaire and the hypotheses were examined using structural equation modeling (SEM).FindingsThe results validated that SMM activities have no significant influence on BE directly. Furthermore, brand love fully mediates the linkage between SMM activities and BE. Likewise, brand trust was found to have a partial mediation effect on SMM activities and BE.Research limitations/implicationsThis study was based on a specific sector in a particular geographic area. Hence, cross-cultural studies on different sectors need to be conducted to generalize the findings of the current research.Practical implicationsThe study offers useful insights for bank marketers to successfully manage SMM activities that can generate consumer interest toward a bank's brand and prevent switching behavior. Furthermore, the proliferation of authentic brand-related information over a firms' social media pages can build strong brand trust, which in turn contributes to BE for the banks.Originality/valueThe study further extended the current knowledge by showing that how SMM activities influence BE in the banking sector in Bangladesh. Also, this study empirically corroborates the mediation influence of brand love and brand trust on SMM activities and BE in the banking sector in Bangladesh, which was rarely tested in prior studies. Hence, the findings will add value to the nascent literature of BE from an SMM perspective.

The relationship between CRM and customer loyalty: the moderating role of customer trust

PurposeThe present study investigates the moderating role of customer trust in customer relationship management (CRM) components and customer loyalty relationships in the context of the baking sector in Bangladesh.Design/methodology/approachData were collected through a survey using a structured questionnaire from 350 customers of commercial banks in Bangladesh.FindingsThe key finding is that all CRM components (customer orientation, customer advocacy and customer knowledge) except customer engagement have positive impact on customer loyalty. Moreover, customer trust only moderates the relationship between customer knowledge and customer loyalty, whereas other CRM components and customer loyalty do not moderate by trust.Originality/valueThe findings of the study add to the substantial pool of knowledge on CRM components, customer trust and customer loyalty literature. More specifically, the moderating role of customer trust between customer knowledge and customer loyalty is the novel contribution of this research which will enrich the existing CRM literature particularly in the banking sector of Bangladesh.

COVID-19 AND RISK INVOLVEMENT IN THE BANKING SECTOR OF BANGLADESH: A STUDY

Covid-19 pandemic has arrived at a widespread risky situation in our individual, financial and communal lives. Now the whole world is thrilled by the cruel clutch of the corona virus and its victim is the global economy. The study focuses on discovering the risk involved in Covid-19 of the banking sector in Bangladesh. Qualitative approach was used to attain the purpose of this study. The study revealed that Covid-19 has a countless effect on the economy and on the banking sector in Bangladesh. In the critical moment of , Bangladeshi banking sector faces huge financial losses, increasing non-performing loans, individual investment and decreasing operating profits. Bank employees are affected seriously for performing their daily activities. They are passing their days with great fear.

PREDICTING THE EFFICIENCY OF COMMERCIAL BANKS IN BANGLADESH

This paper examines the efficiency of the thirty-six commercial banks (27 Domestic and 9 Foreign Banks) by reviewing Literature and analyzing 6 years (2011-2016) data. The sample was selected based on the availability of data. It is assumed that the banking sector complies with the variable returns to scale (VRS) approach which means the output of a bank is not proportionately related to its inputs. Therefore, VRS in the ‘Data Envelop Analysis (DEA)’ technique has been employed in this paper. The findings reveal that most (30 banks out of 36 banks) of the banks of Bangladesh are inefficient in terms of technical, allocative, and scale efficiency during the 2011-2016 periods. Conversely, only six banks (4 domestic banks and 2 foreign banks) were found efficient in overall scores in this scrutinization. This study did not find any single bank as efficient in all categories (allocative efficiency, technical efficiency, pure efficiency ratio) for the whole study period (2011-2016). This paper provides valuable intuition, analysis, and comments to the managers and policymakers of the bank’s efficiency score so that they comprehend their position. Finally, this paper suggests necessary steps to transform the inefficient banks into efficient banks, and to make stable the banking sector of Bangladesh.
 JEL Classification Codes: E51, G21, M1.

An Empirical Study on Human Resource Management and Employment Performance Practice in the Banking Sector in Bangladesh

Banking sector is one of the first growing sectors in Bangladesh. Like any other emerging economic sector banking sector’s growth and development needed to be assess and evaluated through employment performance. There are 56 commercial banks in Bangladesh currently offering financial service with different stratagems. Performance evaluation and assessment is significantly important while achieving the goals of the organization and determining the individual contributions to the organization. The objective of the study is to measure the effects of human resource practice on the performance of employee in the banking sector of Bangladesh. The research has been conducted through structural and semi-structural questionnaires and face-to-face interview related to some human resource issues namely-institutional commitment and motivation, employee relations, compensation, physical work environment, training and development, promotion, job satisfaction as well as the employee performance of the designed banks. A set of 30 structural and same number of semi structural questionnaires were given to 328 bank employees of different levels of 10 selected banks. According to the study all the human resource practice including compensation and training & development have significant impact on the employee performance in the banking sector in Bangladesh. The findings of the study provide a clear guidance to the banking policy makers to pursue effective initiatives with in order to achieve organizational goal through the employee performance.

Financial Inclusion Disclosure: Empirical Evidence From Banking Industry Of Bangladesh

Financial inclusion refers to the procedure of making financial services accessible to all individuals and businesses at reasonable costs. Financial inclusion strives to address the constraints that retard people from participating in the financial sector. It has been drawn much attention for its contribution to economic and commercial development, raising inclusive growth, minimizing income inequality all over the world, especially in developing countries like Bangladesh. Central Bank of Bangladesh (Bangladesh Bank) formulated a financial inclusion policy in 2009 intending to make banking services available to unbanked people. This study examines the Financial Inclusion Disclosure by 30 Banks (5 state-owned banks and 25 private commercial banks) of Bangladesh, which are listed in the Dhaka Stock Exchange during the period 2015-2019. The objective of the study is to analyze the activities of the banking sector of Bangladesh for making banking services available to unbanked people. For that purpose, annual reports of the selected banks have been studied, and findings are demonstrated through graphs. According to the study findings, priority areas of financial inclusion include school banking, agent banking, street children account,10 taka farmers account, SME financing, rural credit, women entrepreneur loan, etc. This study also shows the prospects of financial inclusion, financial inclusion issues that are highly emphasized, barriers to financial inclusion, and initiatives needed to overcome these barriers. This study findings depict that the financial inclusion performance of state-owned banks of Bangladesh is relatively better than those of private commercial banks, and inclusion actions are increasing with time. Policymakers might use these findings and also the banks to ensure no eligible person remains unbanked.
 
 Keywords: Bangladesh Bank; disclosure; financial inclusion; unbanked people

Fraudulent Financial Reporting in the Banking Sector of Bangladesh: A Prediction

Fraudulent Financial Reporting in the Banking Sector of Bangladesh: A Prediction

Resilience of commercial banks of Bangladesh to the shocks caused by COVID-19 pandemic: an application of MCDM-based approaches

PurposeThe purpose of this study is to analyze and forecast the financial sustainability and resilience of commercial banks of Bangladesh in response to the negative effects of COVID-19 pandemic.Design/methodology/approachEighteen publicly listed commercial banks of Dhaka Stock Exchange (DSE) have been taken as a sample for this study. To measure the riskiness of banks' credit portfolio, nine industries of DSE have been considered to determine probable loss of revenue arising from the COVID-19 pandemic shock. Moreover, two commonly used multiple-criteria-decision-making (MCDM) tools namely TOPSIS method and HELLWIG method have been used for analyzing the data.FindingsBased on the performance scores under TOPSIS and HELLWIG method, banks are categorized into three groups (six banks each) namely top resilient, moderate resilient and low resilient. It is found that EBL and DBBL are the most resilient banks, and ONEBANK is the worst resilient bank in Bangladesh in managing the COVID-19 pandemic shock.Research limitations/implicationsThis study concludes that banks with low capital adequacy, low liquidity ratio, low performance and higher NPLs are more vulnerable to the shocks caused by the COVID-19 pandemic. The management of commercial banks should emphasize on maintaining higher capital base and reducing default loans.Originality/valueResilience of the Bangladeshi banking sector under any adverse economic event has been examined by only using stress testing approach. This study is empirical evidence where both TOPSIS and HELLWIG MCDM methods have been used to make the result conclusive.

Impact of Liquidity on Profitability: A Study on the Commercial Banks in Bangladesh

This research aims to investigate the effect of banks' liquidity on its profitability; with the ordinary course of business and in the medium term (10 years). A quantitative analysis is performed on a statistical sample of forty (40) commercial banks in Bangladesh. Secondary data is used to evaluate the performance of the last ten years (2009-2018) of the annual report of the commercial banks in Bangladesh with 206 bank years of data gathered to consider all Bangladeshi commercial banks. Proposed variables are: LDR, DAR, CDR, LAR and CR as liquidity representation; on the other hand, ROE is the profitability representation. Five hypotheses have been established to assess the effect of liquidity on profitability. Following a correlation and regression analysis, it is observed that LDR, DAR and CDR had a substantial effect on the profitability measured as ROE, but LAR and CR proved insignificant. Therefore, it can be concluded that, in general, the impact of liquidity has a significant effect on the profitability in the commercial banking sector of Bangladesh. By relying on this report; Bangladeshi banks will be best positioned to keep equality between its liquidity and profitability. Keywords: Liquidity, Profitability, ROE, Commercial Banks

Employee engagement and organizational change initiatives: Does transformational leadership, valence, and trust make a difference?

AbstractThe research investigates the role of transformationalleadership in enhancing employee engagement during organizational change, and the individual and sequential mediating role of valence and trust in leadership. Based on cross‐sectional data from a survey of employees in Bangladesh's banking sector, the study uses structural equation modeling to test four hypotheses related to employee engagement and organizational change. The results showed that transformational leadership positively associated with employee engagement, and that both valence and trust in leadership individually and sequentially mediate the relationship between transformational leadership and employee engagement. The research contributes to the areas of organizational change management and human resource management by clarifying the impact of transformational leadership on employee engagement. It also provides practical guidance on improving employee engagement in Bangladesh's banking sector, and elsewhere, during periods of organizational change.

The Impact of Training and Development on Employee Performance and Productivity: An Empirical Study on Private Bank of Noakhali Region in Bangladesh

Human Resources Management literature regards training as the bloodstream of any organization because the success of an organization to achieve its objectives and goals highly depends on its workforce. For this reason, organizations should invest in employees’ training to enhance their performance and that of an organization. Nonetheless, some organizations regard training as an unnecessary expenditure and always cut training budgets to improve their financial standing to the detriment of their employees’ welfare because that action incapacitates staff to adapt to the ever-changing working environment and uncertain conditions on account of, inter alia, rapid technological innovation and organizational change. This study employed stratified sampling technique to draw a sample of 60 employees from a population of 70 employees through self-administered questionnaire to examine the impact of training on employees’ performance, employee’s motivation and job satisfaction in the banking sector in Private bank of Noakhali region in Bangladesh. This results show that the mean for on the job training and development located from 3.23 to 4.4 and for off the job training and development from 2.36 to 4.05. The overall impact of training and development from the perspective of employees of private banking sector in Noakhali region has mean and standard deviation respectively 3.54 and 0.95 in total. This result indicates that training and development has a high impact on the employee’s performance and productivity in the perspective of employees of private bank in Noakhali region. The findings of the study generally revealed that training not only increases employees’ performance but also positively affects employees’ motivation and job satisfaction within the Private banking sector in Bangladesh Therefore, the banking sector in Bangladesh should regularly allocate resources for employees’ training based on identified skill gaps to sharpen employees’ skills, knowledge and abilities to capacitate them to cope with the ever-changing working environment and uncertain conditions and to improve their motivation and job satisfaction.

Emergence of corporate political activities in the guise of social responsibility: dispatches from a developing economy

PurposeThe objective of this paper is to investigate the emergence of corporate political activities (CPAs) in the form of social responsibility in the banking sector in Bangladesh. The use of institutional logics allows the authors to explore not only the motivations underlying this sudden shift in corporate approach towards corporate social reporting (CSR) disclosure but also to investigate whether a logical plurality exists in this new approach.Design/methodology/approachThe analysis is based on 21 in-depth interviews with policymakers, regulatory bodies and top management and members of boards of directors in the banking sector.FindingsThe findings of this study are both consistent with and different to those of Uddin et al. (2018). While their findings show that Bangladeshi companies engage in CSR activities primarily to demonstrate their allegiance with the ruling political regime driven by notions of traditionalism, this study’s findings show the existence of a logical pluralism across industries in the manner they engage with CSR activities and disclosures. In addition to the dominant market logic, the authors also find the co-existence of community and family logics shaping the nature of CSR disclosures made by banking companies in Bangladesh.Originality/valueThe authors contribute to the accounting and management literature by providing first-hand evidence of the motivations underlying the emergence of CPAs in the context of a developing country. The adoption of an alternative theoretical framework allows the authors to identify the multiple logics that dictate corporate attitude towards CSR engagement and disclosure.

Psychological Impact of COVID-19 Among People from the Banking Sector in Bangladesh: a Cross-Sectional Study.

Despite the pandemic, the Government of Bangladesh decided to keep the banks open to a limited extent to keep the country’s economy afloat. The aim of this study is to assess the psychological impact of COVID-19 among the bankers who are usually more exposed to random people that put them at great risk to be affected. A total of 248 bankers willingly answered our questionnaire consisting of DASS-21 and relevant questions. Cronbach’s reliability coefficient for the DASS-21 scale ranges from 0.84 to 0.90 which advocates that DASS-21 scales are highly reliable measures for this study. Results show that among participants, 11.1% were severe to extremely stressed, 10.6% of bankers were severe to extremely anxious, and 12.1% of them were severe to extremely depressed. The study illustrated, among the Bankers whose colleagues were infected (B=2.251, 95% CI: − 1.473, 3.029), who smoking more (B= 1.505, 95% CI: 0.411, 2.599), who wake up from sleep having a bad dreams (B = 1.018, 95% CI: 0.057, 1.979), their fear of getting infected (B = 1.717, 95% CI: 0.392, 3.04), who use public transportation (B = 1.378, 95% CI: 0.430, 2.236), who misbehave with family members (B = 1.033, 95% CI: 0.071, 1.995) and who beaten children (B = 1.210, 95% CI: 0.141, 2.279) were responsible for higher stress, depression and anxiety scores respectively. Whereas, taking nutritious food (B = −0.229, 95% CI: −0.30, 1.763), doing physical exercises (B = −0.325, 95% CI: −1.158, 0.508) reduced depression, stress and anxiety scores. The authors believed that the result of the study will be beneficial for the government and its policymakers to take psychological intervention strategies and to make certain sufficient corporal settlement of the banking professionals.

The Fourth Industrial Revolution and private commercial banks: the good, bad and ugly

PurposeThis study aims to assess how new and emerging technologies can contribute to achieving the financial goals of the private commercial banking sector in Bangladesh. It considers the perception among the top management about the Fourth Industrial Revolution (4IR) and further measures the readiness of private commercial banks (PCBs) to become resilient.Design/methodology/approachThis study attempts to measure the perception and readiness of the commercial banking sector because of the 4IR based on the stratified sampling method. The research is qualitative and selected PCBs listed in the Dhaka Stock Exchange. 4IR in the context of the banking sector in Bangladesh is a problem that has not been studied more clearly, intended to establish priorities, develop operational definitions and improve the final research design.FindingsThis research has identified a significant gap of study in the preparedness among the private commercial banking sector in Bangladesh to confront the 4IR while indicating the most significant risks and managerial insights. The findings show technologies will dramatically change the nature of work. Traditional system of banking from the branch will be shifting into banking from everywhere. Hence, digital products and services will foster value-driven business. The result of the study also states the readiness of the banking sector is in the preliminary stage and endorses some of the coping approaches.Research limitations/implicationsDifferent schools of thought regarding the role of the 4IR and its future consequences have been observed. The corporate sector in Bangladesh has an inclusive lack of understanding regarding the 4IR.Practical implicationsThe insights may provide directions to banking financial institutions of Bangladesh to thrive during the 4IR. This study is intended to assist policymakers, decision-makers and employees of PCBs to increase awareness and preparedness for future challenges that may appear from the 4IR where the 41 competitive PCBs play vital role in turning the fast emerging Bangladesh economy.Originality/valueThe contribution of this paper associates with academics and bankers to increase understanding of coping in the context of the escalating use of emerging technology-driven banking services within the PCBs in Bangladesh by determining perception and testing different forms of readiness including a variety of important outcomes such as risks.

Disclosures of the Environmental Management Accounting Practices in the Banking Sector of Bangladesh

The disclosure of environmental management accounting (EMA) practices determine the eco-friendly business activities and helps to measure costs and benefits of environmental preservation of any organizations. The study aims to identify the disclosures status of EMA practices in the in PCBs in Bangladesh. The study also aims to examine the factors (total assets, total investment, profit after tax, ROA, ROE, and EPS) influencing disclosure of the adoption of environmental management accounting in listed PCBs in Bangladesh. This study applied quantitative research method to collect and analyze data. EMA disclosure data is collected from the annual reports of the banks and panel data is used to data analysis of the factors. The collected data is analyzed using descriptive statistics, inferential statistics, correlation, and multiple linear regression analysis. Six hypotheses are developed and tested at 5% significance level. The study concludes that the private banks disclose 71.15% information of EMA practices.

The spillover effect of the Bangladesh Bank cyber heist on banks’ cyber risk disclosures in Bangladesh

Bangladesh Bank (BB), the central bank of Bangladesh, experienced a highly organized cyber heist in February 2016 that seriously impaired the legitimacy of the cyber security systems of the country’s overall banking sector. This study examines the spillover effect of that cyber heist on the cyber risk disclosures of the banking sector in Bangladesh. Building on institutional theory, we propose that in emerging markets, after a notable cyber heist experienced by the country’s central bank, the banking sector of the country tends to increase cyber risk disclosures as an institutional strategy to regain legitimacy. Analyzing the disclosures in the annual reports of 38 commercial banks from 2014 to 2018, we find that banks’ cyber risk disclosures significantly increased after the BB cyber heist.We also find that the political embeddedness of the banks and their adherence to Islamic Shariah negatively influence a bank’s tendency to use cyber risk disclosures as a legitimacy-regaining strategy after the heist. Our institutional perspective offers new insights into why the banks in an emerging country engage more in cyber risk disclosures after such an atrocious cyber attack.