Title: Determinants of efficiency and stability: evidence from private commercial banks in Bangladesh

Authors: Mohammad Dulal Miah; Helal Uddin; Nazifa Nusrat Ahmed

Addresses: Department of Economics and Finance, University of Nizwa, Nizwa, Oman ' Ritsumeikan Asia Pacific University, 1-1 Jumonjibaru, Beppu-Shi, Oita Ken, Japan ' Bank Alfalah, 168 Gulshan Avenue, Dhaka 1212, Bangladesh

Abstract: This research aims at examining the determinants of efficiency and stability of private commercial banks in Bangladesh. Data are collected from 20 private commercial banks over the period 2002-2013. Collected data are analysed using accounting ratio, stochastic frontier analysis (SFA), and ordinary least square (OLS) regression techniques. Analysis shows that average profit efficiency is significantly higher than average cost efficiency. Stability is positively related to profit efficiency. Provision for loans and leases (PLL) and statutory reserves appear to reduce banks' cost efficiency. Size is positively related to stability which proves that larger banks are more resilient to adverse financial conditions. Results also indicate that highly capitalised banks are more stable than thinly capitalised banks.

Keywords: efficiency; financial stability; commercial banks; Bangladesh; financial fragility.

DOI: 10.1504/IJAF.2019.106755

International Journal of Accounting and Finance, 2019 Vol.9 No.2/3/4, pp.152 - 169

Accepted: 10 Jun 2019
Published online: 11 Apr 2020 *

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