What drives banking sector performance in Bangladesh?

This study analyzes the profitability of 32 commercial banks in Bangladesh, over the period of 2003-2012, using OLS fixed effect regression technique. In order to identify the difference in profitability determinants between public and private banks, this study has categorized the banks into two separate groups: state-owned public commercial banks and private commercial banks in Bangladesh. The profitability determinants include bank specific characteristics and macroeconomic factors. The estimation results show that there is a significant difference in profitability measure for public and private banks, especially concerning the asset quality and liquidity. In addition, this study has also examined the impact of the international financial crisis on Bangladeshi banks, and found that only the public banks profitability had been affected by the crisis.