Title: Bangladesh's banking sector: Returned from financial crisis?

Authors: Ron McIver, Abu Taher Mollik

Addresses: School of Commerce, Division of Business, University of South Australia, Adelaide, South Australia, 5001, Australia. ' Economics and Finance, Regional School of Business, Faculty of Law and Management, La Trobe University, Bendigo, VIC 3550, Australia

Abstract: This paper evaluates the financial fragility of Bangladesh|s National Banking System (NBS), providing an independent assessment of the Government|s success in returning the NBS from financial crisis during 1987-1996. The evaluation utilises a comprehensive set of macroeconomic and microprudential variables, as per International Monetary Fund (2000). We find that government-owned Nationalised Commercial Banks (NCBs) and Development Financial Institutions (DFIs) were technically insolvent, and that concern should exist about the NBS|s financial fragility due to exposure to adverse changes in macro-economic conditions. However, implicit government guarantee of the NCBs and DFIs protects against financial fragility leading to a banking crisis.

Keywords: Bangladesh; macro-prudential framework; NPL; non-performing loans; financial crisis; banking crisis; nationalised commercial banks; development financial institutions.

DOI: 10.1504/IJTGM.2010.030410

International Journal of Trade and Global Markets, 2010 Vol.3 No.1, pp.82 - 98

Available online: 15 Dec 2009 *

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