Unveiling the nexus of macroeconomic factors on bank performance in Bangladesh

Year 2024, Volume: 6 Issue: 2, 64 - 74, 11.09.2024

Hasibul Islam , Md. Saidul Islam , Shimanto Saha , Tanzika Imam Tarin , Lalmi Soumia , Sunjida Parven , Khusbu Rahman

https://doi.org/10.58251/ekonomi.1467784

Cited By: 6

Abstract

The present study examines the nexus of macroeconomic factors on the banks performance in Bangladesh. It encompasses an analysis of 25 commercial banks, including both Islamic and conventional banks, spanning the period from 2012 to 2021. Employing the ordinary least square regression model, the study considers return on assets as the dependent variable, while the independent variables include GDP growth, inflation, and unemployment. The regression analysis reveals that the unemployment rate exerts a significant impact on the return on assets of banks in Bangladesh. In contrast, GDP growth and inflation do not exhibit a significant effect on the return on assets. Consequently, policymakers should account for the influence of unemployment rates on bank performance when formulating economic policies, emphasizing measures to reduce unemployment rates to enhance bank performance. This consideration is especially pertinent in the context of the COVID-19 pandemic, where policies aimed at preventing widespread unemployment could positively affect bank performance.

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Keywords

GDP, Inflation, Performance, Return on Assets, Unemployment., Bangladesh

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