Abstract:
State-owned commercial banks (SOCBs) are of significant importance in numerous economies, particularly those in the developing world. The profitability of these banks is a topic of consider able interest due to its implications for the financial sector, government policy, and overall economic stability. This report, titled "Determinants of Capital Adequacy Ratio of Commercial Banks in Bangladesh” A Study on State-Owned Commercial Banks in Bangladesh", provides an in-depth analysis of the factors affecting the Capital Adequacy of state-owned banks in Bangladesh, a sector crucial for the country's financial stability and economic growth. Given the crucial role of these banks in the country's financial system and economy, understanding the factors influencing their profitability is of paramount importance. The main objective of this study is to analyze the impact of bank specific and macroeconomic factors on Capital Adequacy ratio of state owned commercial banks in Bangladesh. This study focuses on a single dependent variable, namely Capital adequacy ratio which serves as an indicator of banks' Capital Adequacy Ratio. It also focuses on Five independent variables which are Return on Asset, Bank Size, Liquidity coverage ratio, Loan Growth, Loan to deposit ratio, financial risk and management efficiency as an indicator of bank specific factors. The initial section of the report, referred to as the introduction, encompasses the chapter one and encompasses many components such as the background, problem statement, significance, scope, objectives, and limitations of the study. Chapter two of this study presents a literature review, which is an essential component. A compilation of the most pertinent and consequential scholarly works pertaining to the subject matter is assembled with the aim of offering a full examination of the discourse surrounding the topic and its respective authors. Chapter three provides an over-view of Janata Bank PLC. This chapter encompasses the bank's background, vision, mission, functions, objectives, management structure, values, and the range of services it offers. Additionally, the bank's corporate profile is encompassed within the aforementioned content. Chapter four of the study presents the methodology and conceptual framework of the study. This research is grounded in secondary data obtained from yearly reports, several journals, many web pages, as well as the websites of reputable institutions such as the World Bank, International Monetary Fund (IMF), and Bangladesh Bank. Data were collected from the financial statements of the selective state owned commercial banks in Bangladesh from 2015-2024. In chapter five the study, the financial analysis and findings are presented. This chapter presents a range of statistical techniques, including descriptive statistics, correlation analysis, multicollinearity testing, and heteroscedasticity testing. The Hausman Test has been employed to determine the perfect model for analyzing the panel data of the given sample. Hence, the random effect regression model is deemed appropriate for the inquiry. From the regression analysis, it can be stated that capital adequacy ratio, Liquidity coverage ratio, Loan growth and Loan to deposite ratio have significant relationship with profitability of SOCBs in Bangladesh. Other variables have no significant relationship with profitability of SOCBs. The results and recommendations are presented in Chapter six's conclusion section. The study's results will also help the regulatory body to make suggestions about how SOCBs should run, which is important for maintaining Capital adequacy ratio and keeping the financial sector stable in Bangladesh. Several recommendations are provided that could potentially improve the current situation.
