Nexus between Non-Performing Loan and Profitability: A Comprehensive Analysis of the Banking Industry of Chittagong Stock Exchange (CSE)
Tandra Mondal, Jannat Jahan MimUniversity of Barishal
Email: t.mondal44@gmail.com
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Abstract
Purpose: The aim of this paper is to assess the impact of NPLs on profitability in the Chittagong Stock Exchange (CSE) banking industry in Bangladesh. Methodology:The research employs panel data from 34 selected listed banks spanning the period from 2013 to 2022. The data are analyzed using Descriptive Statistics, Correlation matrix, and Generalized Method of Moments (GMM). Findings: The study reveals a statistically significant negative influence of NPLs on the profitability of listed banks in the CSE. The analysis considers Return on Asset (ROA) and Return on Equity (ROE) in understanding the nexus between non-performing loans and profitability. Practical Implications:The research-derived suggestions are anticipated to be advantageous for banking professionals and regulatory authorities. The findings can guide the formulation of suitable strategies aimed at mitigating the proportion of Non-Performing Loans in the banking sector of Bangladesh. Value: This study contributes to the existing literature on the impact of NPLs on bank profitability, offering specific insights into the context of the CSE banking industry in Bangladesh. Research Limitations: The study is limited by the scope of the Chittagong Stock Exchange (CSE) banking industry and the selected time frame from 2013 to 2022. The findings may not be directly generalizable to other contexts or time periods.