The Impact of Capital Adequacy, Operating Efficiency, Credit and Asset Management on Profitability Performance of Private Commercial Banks: A Study on Bangladesh

Abstract

The purpose of this study is to assess the impact of capital adequacy, operating efficiency, credit and asset management on profitability performance. For this study, a total of 13 Bangladeshi private commercial banks and their annual reports (2015-2019) were considered. Return on assets (ROA) and return on equity (ROE) were used as profitability performance. Descriptive, correlation and multiple regression statistics were used. Correlation results showed that asset management (AM) and credit deposit (CD) were positively and significantly correlated with return on assets (ROA). Regression result revealed that operating efficiency (OE) was negatively significant with return on assets (ROA) and return on equity (ROE). Again credit deposit (CD) was positively significant with return on assets (ROA) and return on equity (ROE). It was also revealed that asset management (AM) was positively significant with return on assets (ROA) and capital adequacy (CA) was insignificant with return on equity (ROE). But a simultaneous significant impact was found on return on assets (ROA) and return on equity (ROE). And recommendations were to manage credit, deposit, capital, expense and asset efficiently and to concentrate on optimizing assets for long run survival in the market.

Keywords: Asset management, Capital adequacy, Credit deposit, Operating efficiency, Profitability performance

DOI: 10.7176/RJFA/13-2-07

Publication date: January 31^st 2022