Banking Performance During the Global Financial Crisis: Empirical Evidence from Bangladesh

Abstract

Purpose-The Russia-Ukraine conflict and 19 pandemics have severely damaged the world economy. Banking institutions are crucial to the functioning of any economy, and their financial standing is a vital indicator of the economy's stability. Any major development, be it political or economic, has an impact on the banking industry. The dollar rate's volatility and other issues hurt the GDP. Therefore, the study examines banking performance in vulnerable global situations before and during the pandemic. This study utilizes 7 years of panel data to analyze global financial crisis banking performance. Design/methodology- Eight ratios were used to compare the banks' profitability, efficiency, liquidity position, and default risk: return on asset, asset utilization ratio, operational efficiency ratio, debt to asset ratio, loan to deposit ratio, loan to asset ratio, credit risk, and bank size. The descriptive statistics show lower ROA and AUR values for banks, but a lower CR value suggests that pandemic-era borrowers will repay their loans on time. Findings – Due to their reliance on borrowed capital, banks may be more vulnerable to default and financial leverage since they lack the liquidity to meet unforeseen requirements for funds. This is indicated by the higher mean values of DAR, LDR, and LAR. Ratio analysis shows that pre-pandemic banks profited well throughout the pandemic. State-owned banks have a worse position in profitability, efficiency, and default risk but a better position in liquidity in both study periods. Conventional banks placed first in profitability, but Islamishariah-based banks placed first in efficiency, high liquidity risk, and low default risk. Originality –This study will help bank officials find the flaw and prevent it from improving financial performance and recovering from the global crisis. This may assist bank investors and depositors in choosing wisely.