Determinants of Non-performing Loans in The Banking Sector of Bangladesh

Abstract

This study scrutinizes the determinants of NPLs observing a case of the banking sector in Bangladesh over the period from 2011 to 2023. During this period, it has been found that non performing loan hurts bank profitability (ROA, ROE), and the capital adequacy ratio this study aims to assess determinants of non-performing loans and their impact on bank profitability. A multiple regression model was applied to find the relationship between nonperforming loans and banking factors such as return on assets (ROA), return on equity (ROE), and capital adequacy ratio. It has been found that non-performing loans hurt profitability. Non-performing loans sternly affect the well-being of the banking division and also the economy of Bangladesh. The findings indicate return on assets, return on equity, capital adequacy, and non-performing loans are inversely related. The consequences of this study leave several policy implications for researchers, and practitioners.