Optimization of Market Stochastic Dynamics

This paper aims to explore the factors affecting the interest rate spread of the listed conventional commercial banks of Bangladesh from 2011 to 2019. For this, banks' interest rate spread has been considered a dependent variable while bank-specific, industry-specific, and macroeconomic factors have been considered independent variables. Bank-specific factors are credit risk, bank size, operating cost, liquidity risk, net interest income, capital adequacy, return on equity. The bank industry-specific factor is market share, while macroeconomic factors are GDP and Inflation. Pooled Ordinary Linear Regression analysis and the random-effect method have been used to investigate the impact of the factors on interest rate spread. The results demonstrate that credit risk, operating costs, and liquidity risk positively impact interest rate spread. The asset size and GDP have both positive and negative relationships depending on the circumstances. In contrast, net interest income, capital adequacy, return on assets, and market share have a negative relationship. The study's findings will assist the regulatory body of the banks in developing strategies to maintain a satisfactory level of interest rate spread.

Section: B Empirical Findingsmentioning

confidence: 99%

An Empirical Study on the Factors Affecting the Interest Rate Spread of Listed Conventional Commercial Banks of Bangladesh

Anjom¹

2021

“…Firms always search for the optimization of profits with highest efficiency. [22]. When the foreign exchange rate is favorable, foreign direct investment increases.…”

Section: Literature Reviewmentioning

confidence: 99%

Impact of Exchange Rate on Economic Growth of Bangladesh

Khan

2021

This paper investigates the impact of inflation, nominal exchange rate, foreign direct investment, and unexpected event shock on the economic growth of Bangladesh by using the time series data from 1990 through 2020. Augmented Dickey-Fuller and Phillips-Perron Unit Root Test used to identify unit-roots existence and check the stationary of variables. The Ordinary Least Squares method is applied to determine the relationship between the dependent variable and independent variables. The results revealed that the exchange rate and foreign direct investment have significantly affected the country's economic growth. Inflation, FDI, and exchange rate positive impact, whereas unexpected events like Covid-19, natural disasters, etc., negatively affect the economic development of Bangladesh. The study can be helpful for the policy makers to identify, formulate and implement the effect policies for the economic growth of the country.

“…Khathlan [10] examined the determinants of inflation in Kingdom of Saudi Arabia for the period 1980 to 2009 and found that in the long run the global inflation rate and exchange rate have substantial influence whereas in the short run, money supply and supply bottlenecks are the major determinants of inflation. Pramanik & Polansky, [11] found an efficient optimization technique to control the macroeconomic variables to reach an optimum solution. Similarly, Pramanik [12] and & Pramanik & Polansky [13] reached the same conclusion using the dynamic profit function.…”

Section: Literature Reviewmentioning

confidence: 99%

Macroeconomic Determinants of Inflation in Bangladesh

Salma

2021

The paper intends to investigate the key determinants of inflation in Bangladesh using the data for the period 2009-10 to 2019-20. The variables used in the study are broad money supply, foreign direct investments, GDP growth, foreign exchange rates and trade balance. Ordinary least squared method has been used to conduct the empirical analysis. The results found that broad money supply, foreign direct investments and trade balance has positive and significant association with the inflation. GDP growth has negative and insignificant relation with the inflation whereas foreign exchange has positive but insignificant association with the inflation. The unexpected event of Covid-19 has also found to have some contribution in affecting the inflation rate.