Impact of bank liquidity, cost efficiency and capital adequacy on bank profitability in post crisis period in Bangladesh
by Rakibul Islam
International Journal of Monetary Economics and Finance (IJMEF), Vol. 14, No. 6, 2021

Abstract: This paper aims to investigate the impact of bank liquidity, cost efficiency, and capital adequacy on bank profitability during 2009-2018 in Bangladesh. The application of two-step system generalised moment of mean (GMM) method finds the significant impact of liquidity, capital adequacy, and economic activity of a country on profitability. The impact of cost-efficiency remains inconclusive. Banks with high liquidity are more likely to be less profitable and banks with greater capital are the more successful banks. Thus, banks that maintain greater loans and advances to deposits and high capital to risk-weighted assets are more profitable in Bangladesh. Meanwhile, the government policy of increased economic activity positively affects bank profitability. This study has great significance to the bank managers, directors, and regulatory bodies.

Online publication date: Tue, 04-Jan-2022

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