NON-PERFORMING LOAN AND ASSET UTILIZATION OF BANKS: EVIDENCE FROM BANGLADESH

The purpose of the research paper is to investigate the impact of non-performing loan (NPL) on return on asset (ROA) of banks in a least developed country as Bangladesh. The research employs a sample size of 40 consisting of the data of non-performing loan ratio against return on asset ratio for las...

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Bibliographic Details
Published inRomanian Economic and Business Review Vol. 13; no. 4; pp. 31 - 39
Main Authors Islam, Mohammad Ziaul, Aktar, Shormin, Hossen, Mohammad Awal, Islam, Mohammad Saiful
Format Journal Article
LanguageEnglish
Published Brasov Romanian-American University 22.12.2018
Romanian-American University, Scientific Research Department
Subjects
Annual reports
Bad debts
Bank failures
Bank loans
Bank management
Banking industry
Bankruptcy
Banks (Finance)
Commercial banks
Credit risk
Developing countries
Economic conditions
Economic crisis
Economic growth
Economics
Emerging markets
Financial markets
Financial performance
GDP
Gross Domestic Product
Hypotheses
Installment payments
Interest rates
LDCs
Loans
Macroeconomics
Nonperforming loans
Political corruption
Profitability
Regression analysis
Research methodology
Return on assets
Statistical analysis
Unemployment
Variance analysis
Bangladesh
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Summary:The purpose of the research paper is to investigate the impact of non-performing loan (NPL) on return on asset (ROA) of banks in a least developed country as Bangladesh. The research employs a sample size of 40 consisting of the data of non-performing loan ratio against return on asset ratio for last 10 years (2008-2017) generated from four categories of banks namely- State Owned Commercial Banks (SCBs), Specialized Banks (SBs), Private Commercial Banks (PCBs) and Foreign Commercial Banks FCBs). The paper provides empirical evidence that non-performing loan has significant impact on return on asset of Bank. This study will help the policy makers to maintain desired level of NPL ratio for ensuring ROA targeted by the bank. This research seems to be the first attempt to address such an issue in the context of Bangladesh because most of the literature shows impact of NPL on profitability only ignoring the issue of asset utilization of banks. Keywords: State Owned Commercial Banks (SCBs), Specialized Banks (SBs), Least Developed Country (LDC), Return on Assets (ROA), Money Market JEL Classification: E22, E44, M15
ISSN:1842-2497
2344-4843