Investigating the Market Interest Rate on Commercial Banks Financial Performance in Bangladesh

Authors

  • Debashis Saha Department of Finance & Banking, Faculty of Business Studies, Jahangirnagar University, Savar, Dhaka
  • Prodip Chandra Bishwas Jahangirnagar University, Bangladesh
  • Md. Mustofa Ahmed Sumon Bangladeshi Army University of Engineering and Technology, Bangladesh

DOI:

https://doi.org/10.52962/ipjaf.2021.5.1.118

Keywords:

Market Interest Rate, Profitability, Lending Rate, Investment, Bangladesh

Abstract

The banking sector is the most vital partner of development for countries' economies. It has a remarkable contribution to the country's Gross Domestic Product. This study investigates the relationship between the market interest rate and commercial banks' financial performance. As Bangladesh's banking industry is growing, it is vital to maintain a more robust profitability level for its financial stability and soundness. Banks have some determinants that have a significant impact on their performance. The convenience sampling method is used to select the targeted sample. The study includes the time series data of eight years of fifteen commercial banks listed on the Dhaka Stock Exchange in Bangladesh. Multiple variable linear regression and correlation analysis are performed to examine the relationship of market interest rate with banks' profitability with statistical software, IBM SPSS version 25, and Microsoft excel. The study explored that the market interest rate has a significant positive impact on banks' profitability. It is also found that the lending rate and interest rate spread are significantly correlated with the banks' financial performance. The study recommended that banks make their investment to make a higher profit margin to enhance their management and financial soundness efficiency.

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Published

2021-01-01

How to Cite

Saha, D., Bishwas, P. C., & Sumon, M. M. A. (2021). Investigating the Market Interest Rate on Commercial Banks Financial Performance in Bangladesh. Indian-Pacific Journal of Accounting and Finance, 5(1), 3–12. https://doi.org/10.52962/ipjaf.2021.5.1.118

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Section

Main Section