A Study on Profitability Analysis of Five Bangladeshi Banks

109 Pages Posted: 19 Oct 2015 Last revised: 8 Jun 2018

See all articles by Muhammad Al Amin

Muhammad Al Amin

Independent University, Bangladesh (IUB)

Mohammad Arafat Ali

Independent University, Bangladesh (IUB)

Rahatul Jannat

Independent University, Bangladesh (IUB)

Taysir Taher

Independent University, Bangladesh (IUB)

Mohammad Abdullah

Independent University, Bangladesh (IUB)

Rizvy Ahmed

Independent University, Bangladesh (IUB)

Noor Mohammad

Independent University, Bangladesh (IUB)

Date Written: August 28, 2015

Abstract

In light of recent events that have taken place in the Bangladesh, the importance of knowing the financial position of banks is imperative to stakeholders. In this sector the most used financial statements are the financial position, profit and loss account and statement of cash flow where the financial position shows the assets, liability and stock holder equity. Statement of cash flow shows the banks cash disbursement and saving, profit and loss account shows the net profit or net loss of a bank. The focus of this study is to confirm the validity of Altman’s Z-Score model as a predictor of Bangladeshi bank failures. This requires two data sets: failed and non-failed banks. The empirical findings verified the predictive ability of the Z-Score model to the Bangladeshi banks. Our data shows that all selected banks are insolvent. It show that all banks are performing very aggressive as working capital and Equity to Debt ratio is low. Some banks have negative working capital, so they cannot liquidate day to day business. Most of banks have low equity than liability. Because they are taking more deposit than loans. They have to reconstruct their capital structure and have to satisfy liquidity in order to be solvent.

Keywords: Bangladesh, Z-Score model, Bankruptcy, Financial stability, financial performance, Discriminant Analysis

JEL Classification: E60, E62, E66, F47, P34

Suggested Citation

Al Amin, Muhammad and Arafat Ali, Mohammad and Jannat, Rahatul and Taher, Taysir and Abdullah, Mohammad and Ahmed, Rizvy and Mohammad, Noor, A Study on Profitability Analysis of Five Bangladeshi Banks (August 28, 2015). Available at SSRN: https://ssrn.com/abstract=2655753 or http://dx.doi.org/10.2139/ssrn.2655753

Muhammad Al Amin

Independent University, Bangladesh (IUB) ( email )

Plot - 16, Block - B, Aftabuddin Ahmed Road
Bashundhara R/A
Dhaka, 1212
Bangladesh

Mohammad Arafat Ali

Independent University, Bangladesh (IUB) ( email )

Plot - 16, Block - B, Aftabuddin Ahmed Road
Bashundhara R/A
Dhaka, 1212
Bangladesh

Rahatul Jannat

Independent University, Bangladesh (IUB) ( email )

Plot - 16, Block - B, Aftabuddin Ahmed Road
Bashundhara R/A
Dhaka, 1212
Bangladesh

Taysir Taher

Independent University, Bangladesh (IUB) ( email )

Plot - 16, Block - B, Aftabuddin Ahmed Road
Bashundhara R/A
Dhaka, 1212
Bangladesh

Mohammad Abdullah (Contact Author)

Independent University, Bangladesh (IUB) ( email )

Plot - 16, Block - B, Aftabuddin Ahmed Road
Bashundhara R/A
Dhaka, 1212
Bangladesh

Rizvy Ahmed

Independent University, Bangladesh (IUB) ( email )

Plot - 16, Block - B, Aftabuddin Ahmed Road
Bashundhara R/A
Dhaka, 1212
Bangladesh

Noor Mohammad

Independent University, Bangladesh (IUB) ( email )

Plot - 16, Block - B, Aftabuddin Ahmed Road
Bashundhara R/A
Dhaka, 1212
Bangladesh

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