Determinants of Bank Profitability before and during Crisis: Evidence from Bangladesh

This paper examined the factors of profitability and as we know the main components of banks profitability is measured by the return on average asset and return on average equity. Moreover, this research examined to find the relationship between profitability and its determinants in Bangladesh context during recession and Pre-recession. Some others external and internal factors also considered to measure the banking profitability of bank. Return on average asset (ROAA) is considered as a dependent variable and which is the measurement of profitability in this study, whether, independent variables are divided into two segments: those are bank-specific characteristics (internal factors) such as - Equity Over Total Assets (ETA), Cost-Income Ratio (CIR), Loan Loss Provisions Over Total Loans (LLPOTL), Yearly Growth Of Deposits (YGD), Net Interest Income Over Net Income (NII) and industry-specific characteristics (external factors) such as - Effective Tax Rate (ETR), Real GDP Growth (RGG), Treasury Bonds (TBDiff), Inflation Growth (IG). To conduct the research the data for pre-crisis period (2002-2006) and, on the contrary, during crisis situation (2007-2008) was taken. The results show that bank-specific (internal) and market-specific (external) factors have influence on bank profitability, but macroeconomic factors do not.