Impact of Macroeconomic Factors on Performance of Banks in Bangladesh

Abstract

The present study investigates the impact of macroeconomic factors on the performance of banks in Bangladesh. The study analyzed 25 commercial banks consisting of both Islamic and conventional banks in Bangladesh from 2012 to 2021. The data was analyzed using the ordinary least square (OLS) regression model. Return on assets (ROA) is the dependent variable while macroeconomic variables such as GDP growth (GDPG), inflation (INF), and unemployment (UNEP) are the independent variables. The regression results showed that unemployment rate have a significant impact on the return on assets for banks in Bangladesh banks. There was no significant impact between GDP growth and inflation on the return on assets. Policymakers should consider the impact of unemployment rates on bank performance when making economic policy decisions, with a focus on reducing unemployment rates to improve bank performance. This has been particularly relevant during the COVID-19 pandemic, where policies to prevent widespread unemployment could have positive effects on bank performance