Are Foreign Bank Subsidiaries More Profit Efficient Than Domestic Ones? - An Analysis on Earning Approach of Private Sector Banks, Bangladesh

Abstract

Profitability indicates the efficiency with which the operations of the business are carried on. The measurement of profitability in banking is necessary to improve the financial soundness of banks. The banking in private sector of Bangladesh comprises both domestic and foreign bank subsidiaries. The main purpose of this study is to determine and compare the profitability of foreign banks with domestic conventional and Islamic banks operating in Bangladesh. Among various variables here two most important profitability ratios: Return on Asset and Return on Equity are used to analyze the performance of private sector banks. A sample of nine private sector banks has been selected randomly to measure and compare their performance for the period of 2010 to 2018. Each year the average ratios were considered. In this work, t-test analysis is used to determine the significance of this study. The study has shown that there is no significant difference between the profit efficiency of foreign bank subsidiaries and domestic banks (Islamic and Conventional). KEYWORDS: Profitability, Islamic Banks, Conventional Banks, Foreign Banks, Private Sector.

Relationship Between Banking Performance and Financial Distress: A Study on Banks of Bangladesh

“…He found 75% of the firms are healthy and rests are in danger. Similar study by (Sanesh, 2016;Celli, 2015;Khaddafi, 2017) used Z score model and confirmed reliability of this model. Some researchers on the other hand suggested for further improvements.…”

“…The performance of bank as a financial institution in both developing and developed economies is vital for financial sectors growth (Saha & Anjum, 2020). Out of several ways to measure company performance, financial ratios are widely used by researchers to measure performance.…”