| Popis: |
This research is an endeavor to assess the soundness of financial health of banking sector through IMF prescribed Core Financial Soundness Indicators Model (FSI) for the selected banks in Bangladesh based on a panel data of 155 Bank-year observations during the time horizon of 2015-2019. This study also assessed how FSIs vary across different groups of banks (State-owned, Conventional Private Commercial Banks (PCBs), Islamic Banks, Foreign Banks, 4th Generation Banks) and impact the stability of banks in Bangladesh. Two separate analysis have been conducted: Core FSI with ANOVA and bank stability with Panel Regression Model. Bank Z Score value was used as a measure of Stability. Variables like Capital Adequacy (CRAR), Asset Quality (NPL), Profitability (ROA & ROE) and Liquidity (LCR & NSFR) were considered as measures of banking soundness. The results show that soundness varies significantly among different groups of banks. The condition of State-owned commercial banks is really perilous as they are burdened with significantly high amount of NPL and lower amount of profit. Only Foreign banks showed better financial soundness in terms of all the chosen FSIs. The results of Panel Fixed Effect Model depict that profitability has strong positive impact on banking stability in Bangladesh. Non-performing loans and liquidity have negative impact on stability. The regression findings also reveal that capital adequacy impacts stability negatively. This negative relation demands a thorough review of the existing capital adequacy requirements of the country’s banking sector. These research findings will provide the policy-makers as well as the regulatory authorities with significant policy implications and also help them conduct an in-depth macro-prudential analysis towards a stable financial system. However, these findings require to be interpreted cautiously keeping in mind that these selected FSIs are only some of many other tools such as early warning systems, stress testing and so on. |
