An Empirical Analysis of Liquidity, Profitability and Solvency of Bangladeshi Banks

Journal of Business & Financial Affairs 5: 157, 2015, DOI: 10.4172/2167-0234.1000157

12 Pages Posted: 18 Dec 2015

See all articles by Mohammad Abdullah

Mohammad Abdullah

Independent University, Bangladesh (IUB)

Date Written: November 24, 2015

Abstract

The financial sector of Bangladesh is small and under development and this sector resides of a banking and an emerging capital market. The banking sector in the country comparatively more developed than the equity market, even though both are developing in international benchmark. In light of recent events that have taken place in the Bangladesh, the importance of knowing the financial position of banks is imperative for investors. Most investor use balance sheet, income statement, change in equity and statement of cash flow to calculate different ratios for technical analysis. Investor use this ratio and trend analysis to invest in capital market. In this research I take 29 banks as sample size and calculate their different ratios. For examining the applicability of Altman’s Z-Score model to forecasting banking failures. The emphasis of this research is to endorse the cogency of Altman’s Z-Score model as a predictor of Bangladeshi bank failures. I after analyzing the all sample banks Z-Score I found that 7 banks are in healthy financial position and 22 banks are in insolvent during the time period of FY 2009-2014. Islamic or Sariah follower banks are doing better than conventional banks. State owned banks are doing better than before. This research endorses that those banks are in insolvent zone for their published financial review or trend statement. This supplementary material is probable to intensification stockholder assurance by their ability to make more conversant decisions.

Keywords: Financial performance, Liquidity; Bankruptcy, Bangladesh, Bank, Credit risk, Z-score, Bank profitability

JEL Classification: G33, P35, G31, E50

Suggested Citation

Abdullah, Mohammad, An Empirical Analysis of Liquidity, Profitability and Solvency of Bangladeshi Banks (November 24, 2015). Journal of Business & Financial Affairs 5: 157, 2015, DOI: 10.4172/2167-0234.1000157, Available at SSRN: https://ssrn.com/abstract=2704022

Mohammad Abdullah (Contact Author)

Independent University, Bangladesh (IUB) ( email )

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

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