Abstract:
The study provides a thorough framework for understanding what affects bank profits and helps people in the banking industry make better choices. The research is based on a quantitative and explanatory design using secondary data collected from the annual reports of six commercial banks Sonali Bank PLC, Janata Bank PLC, Agrani Bank PLC, IFIC Bank PLC, Pubali Bank PLC and Islami Bank Bangladesh PLC over a five-year period from 2019 to 2023.A purposive sampling technique is applied to ensure the inclusion of both state owned and private sector banks. The study incorporates both internal and external variables. Internal factors include Non Performing Loans (NPL), Capital Adequacy Ratio (CAR), Statutory Liquidity Ratio (SLR), Cost to-Income Ratio (CIR), and Bank Size while external factors include GDP growth, interest rate, and inflation rate. Panel data regression techniques, including pooled OLS, Fixed Effects and Random Effects models are used to analyze the relationship between these variables and bank profitability. Various statistical tests such as correlation analysis, multicollinearity test, Hausman test, heteroskedasticity test and autocorrelation test are conducted to ensure the robustness of the results. The findings of the study are expected to show that internal efficiency factors, particularly NPL and cost management play a significant role in determining profitability while macroeconomic variables also influence bank performance to varying degrees. The study highlights that both internal management practices and external economic conditions must be considered together for a comprehensive understanding of bank profitability. This research contributes to the existing literature by integrating both internal and external determinants using recent panel data in the context of Bangladesh. It provides practical implications for bank management, policymakers, and investors by identifying key areas for improving efficiency and financial performance. Overall, the study offers a comprehensive framework for understanding the factors that influence bank profitability and supports better decision-making in the banking sector.
