PhD Thesis

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A Comparative Study on Non-Performing Loans of Some Selected State-Owned and Private Commercial Banks in Bangladesh
(University of Dhaka, 2019-10-02) Islam, Md. Ariful
This thesis utilizes the data gathered from 5 state-owned commercial banks along with the 16 private commercial banks for the time period of 2009 to 2017 to perform a comparative analysis. Dynamic panel data model (GMM estimation) has been employed with time dummies to determine the effect of non-performing loans, efficiency, loan recovery and loan write-off. Furthermore, questionnaire survey with five-point LIKERT scale has been conducted to formulate the important comparative factors under which the state-owned and private banks can be clearly distinguished. Before performing the comparative analysis, this thesis also used the data gathered from 16 private commercial banks for the time period 2006 to 2017 to investigate the relationship between non-performing loans and its determining factors. Dynamic panel data model (GMM estimation) has also been employed in this case with time dummies to control for macroeconomic events to determine the effect of bank-specific factors on the performance of loans. Questionnaire survey with five-point LIKERT scale had been conducted to formulate the perception of bankers and borrowers about the prevailing factors affecting the condition of non-performing loans. Before the comparative analysis between the state-owned and private commercial banks, this thesis analyzes the impact of the cost of fund, average lending rate and excessive loans from a long- run perspective. In this regard, lagged per-capita GDP and real interest rate have been used to control for macroeconomic factors. Time dummies were used to replace the macroeconomic factors to find out the overall time-specific fixed effects on the condition of nonperforming loans. Additionally, this paper uses the banks size and individual bank’s loan to total loans of the banking industry as a measure of bank size and market power. This is a novel research in Bangladesh which specifically identifies the impact of lagged credit lending by banks up to four years. Moreover, this paper uses the lagged per-capita GDP up to two periods to investigate the impact GDP on the performance of bank’s loan quality. Empirical analysis in this study has found a significant relationship between lagged credit growth and the future non-performing loans. Loans which are disbursed today out of competition or aggressiveness have a huge probability of becoming default in the long-run. Furthermore, this research also uses inflation-adjusted cost of fund and average lending rate to find a significant long-run association with bad loans. Another finding of this research indicates that an increase in the cost of fund induces a positive change in the lending rate in the following period which ultimately affects the credit quality in the long-run. Empirical results have shown that there is a significant positive relationship between the banks’ “cost of fund” and “non-performing loans” in the long-run but the relationship is not significant in the shorter time frame. The results highlight a strong long-run causality between banks’ NPLs and COF in the PCBs of Bangladesh. Furthermore, results also suggest that higher NPLs for some banks can induce in the rise in banks’ COF in a bidirectional form. Moreover, the results have shown that higher COF leads to the growth of NPLs and as a result, the provision for bad loans is also increased which ultimately reduces the income of the banks. This process forces the banks to write-off loans from the balance sheet to reduce the non-performing assets from the books. In terms of the lending rate, the study found some interesting situations where higher lending rate causes the non-performing loans to fall and rise gradually. It has been found in the study that higher lending rate causes a decline in the demand of the loans which makes the current non-performing loans smaller. This situation does not prevail for a long period of time because banks ultimately increase the loan growth abruptly to maintain their earnings which causes the bad loans to increase in the long-run. Based on the questionnaire survey, this thesis brings out the perception of bankers and borrowers in identifying the bank-specific and macroeconomic factors of non-performing loans in Bangladesh. This investigation used questionnaire survey on 75 bankers and 25 borrowers in 2018 to identify the effect of the cost of fund and average lending rate on the non-performing loans. The data have been collected through face to face interview, telephone and emails. The study found political stability, loan evaluation, banking corruption, energy-crisis and borrowers honesty to be significantly related to non-performing loans. The survey used face to face interview, emails and phone calls to question about the factors of bad loans. The study used SPSS software to find the reliability of the survey. The study used the variable cost of fund and lending rate to formulate a link in analyzing the relationship between cost of fund and nonperforming loans. Finally, the comparison between the state-owned and private commercial banks revealed important comparing factors under which the distinction between these different bank groups have been put forward. GMM estimation results found that cost efficiency, loan write-off and loan recovery (which was previously written off ) does not affect the state-owned commercial banks in the same manner as they affect the private banks. Non-performing loans were found to be significant for both bank groups that affected their profitability negatively. The effect of operating cost (measure of efficiency )was insignificant on the profitability of the state-owned commercial banks unlike the negative impact it posed on the income of the private banks. The comparative analysis found loan write-off to pose a negative impact on the pre and after-tax profit of the private commercial banks but the effect was not significant for the public banks. Loan recovery had a positive consequence on the profit of the private commercial banks as expected but the recovery of the written off loans did not increase the profit of the public banks. Aside from the comparative analysis through secondary data, the study also employed another questionnaire survey through face to face interview to compare the pubic banks with the private banks. The study found non-performing loans, capital injection, use of advanced technology, corruption, branding and marketing, willful defaulters, cost inefficiency, loan against letter of credit acceptance (inland ), customer service and political influence to be the important factors of comparison.
A Study into the Factors Determining the Gap Between Projected and Actual Revenue Collection from the Banking Sector in Bangladesh: A Trend Analysis
(University of Dhaka, 2019-10-02) Karim, Syed Md. Aminul
Significantly higher accumulation and mobilization of domestic resources for financing national budget was the panacea of recent rapid economic growth of Bangladesh. Though internal resource is crucial for the economic development, the tax revenue collection gap in Bangladesh is unusually high. Focusing on the banking sector which is the largest direct tax revenue source of NBR, the study attempts to explore the reasons, factors and the interrelationship among the factors that determine the tax revenue collection and the difference between expected and actual revenue collection from the bankingsector. Amultiple regression method was used to ascertain the determinants of the propensity to pay tax whilst an Ordinary Least Square (OLS ) procedure was used to estimate the factors that explain the tax gap. The results from the econometric estimations of the study show that change in the factors such as non-performing loan, operating cost, fees and commission, tax rate, inflation and Gross Domestic Product (GDP )have significant effects on the tax collection and its gap. The qualitative factors such as political intervention, tax avoidance tendency, tax evasion affect the quantitative factors significantly. Finally, the calculations of the tax gap for thirty-six (36)individual banks of Bangladesh for the period of six years (2012-2017 )were displayed. The observations, analysis, and findings of the study suggest that ensuring internal control and compliance by banks is highly important to manage the bank specific factors that determine the tax revenue collection and its gap. Monitoring and observation by Bangladesh Bank should be held on regular basis in this perspective. Tax-net should be expanded by NBR, the procedure of tax administration should be digitalized and simplified through business process reengineering, a fully functioning research unit should be established, a systematic methodological standard should be followed to estimate the projected revenue properly, new tax code and rules should be enacted and implemented. The potential of generating tax revenue is very high which needs to be captured and the revenue composition pattern should be reversed to ensure equity and justice in the society in line with the constitutional obligation through optimal tax policy and proper administration of tax laws following international best practices.
Agricultural Credit and Its Impact on Agricultural Productivity: A Study on Rural Areas of Dhaka
(©University of Dhaka, 2024-11-18) Hossain Patwary, Md. Sazzad
The agricultural sector has been regarded as the prime sector of the economy of Bangladesh since the industrial sector took its roots from this sector, and the service sector is also passively influenced by the agricultural sector. Besides its economic importance, this sector also has some social (i.e., food supply, nutrition demand fulfilment, rural employment) and environmental (i.e., influence on climate, biodiversity) contributions. In any developing country, economic and financial activities largely depend on smooth financial intermediation. Banks, as financial institutions, can play a vital role in this regard. Hence, Banks in Bangladesh can contribute to the economic development process through effective and efficient lending. In view of this sectoral importance, Bangladesh Bank has announced agricultural credit as a priority sector lending and mandatorily incorporated all scheduled banks to lend in this sector to increase agricultural productivity. The purpose of this study is threefold: i) Detect the nature of the farmers’ agricultural credit constraint status, explore the problems associated with access to banks’ agricultural credit and find the intensity of banks’ agricultural credit diversion to non-agricultural purposes. ii) Identify the determinants of constraint, access to credit and credit fungibility status. iii) Estimate the impact of constraint, access to credit and credit fungibility status on agricultural productivity. A filed level survey was conducted over five sub-districts of Dhaka. Four hundred sampled farmer’s data were collected through a structured, close-ended questionnaire. Collected data were further analyzed with STATA 14.2 software in both descriptive (i.e., cross-tabulation, ratio, mean and percentage) and analytical frameworks (i.e., probit regression model, propensity score matching model) The outcome of descriptive statistics stated the condition of constraint status, access problems and extent of fund diversion. The probit regression model identifies marital status, gender, risk perception, cooperative membership, land ownership deed, total owned land and distance to bank variables that are found statistically significant to explain the constraint status of the farmers. While education, household size, household labor, krishi card, past access to bank credit, the purpose of farming and bank account variables are found statistically significant to predict access vii to credit status. On the other hand, we have found that chronic diseases, delay in disbursement, old debt, non-fixed assets, and household size variables significantly influence credit fungibility status. Then paired t-test confirms several socio-economic differences exist between farmers' group, i.e., constraint and unconstraint, accessed and non-accessed, fungible and non-fungible. Results of the mean productivity confirm that unconstraint, accessed and non-fungible farmers' input use, production and income are significantly higher than the constraint, non-accessed and fungible farmers. Finally, PSM estimates revealed that the farmers' constraint and fungible status negatively impact input use, production and income. While the access status of the farmers positively affects input use, production and income. Bangladesh Bank, the central monetary authority of Bangladesh, annually issues Agricultural and Rural Credit Policies and Programs for scheduled banks in Bangladesh. The empirical findings of this research can contribute to the modification of the agricultural credit policy of Bangladesh Bank. Moreover, other research findings, suggestions and recommendations can also incrementally contribute to taking policy measures by different relevant stakeholders. The novelty of this study lies in using a very extensive, unique and newer data set to decompose the determinants of banks’ agricultural credit constraints, access and diversion issues and their corresponding impacts on agricultural productivity. In Bangladesh, to the best of our knowledge, no work has been done on farmers' formal agricultural credit’s different status determination and impact assessment issues based on micro-level data. Thus, we expect this evidence from Bangladesh can contribute incrementally to the existing literature.
An Empirical Study of the Determinants of Non-performing Loan of State Owned Commercial Banks of Bangladesh
(© University of Dhaka, 2025-04-10) Hossain, Sheikh Mozaffar
The issue of nonperforming loan (NPL) is crucial in the context of Bangladesh. It is more crucial in case of the state-owned commercial banks (SCBs). As per annual reports of Bangladesh Bank (BB), the overall NPL ratio of the banking industry is about 9% during the research period, 20009-2020. But the NPL ratio of the SCBs is about 22% during the same period. Despite having valuable strengths like sovereign ownership, qualified manpower and enormous infrastructure, the performance of the SCBs is disappointing. According to the annual reports of the SCBs, the average share of the industry NPL of the SCBs was 47.44% as against 26.71% share of industry asset during 2009-2020. This high rate of NPL has become a matter of concern for all. Though the regulators and the government have taken several steps, the NPL is increasing at a progressive rate. The first step of the way out of this situation is obviously subject to the identification of actual causes of the NPL. Under this backdrop, this paper attempts to identify the determinants of the NPL of the SCBs of Bangladesh. For this purpose, I studied a novel panel data for a period of 2009-2020 along with the analysis of primary data to identify the impact of the qualitative factors. Note that it is not possible to go back beyond 2009 since one of the SCBs, BDBL, commenced its function as a commercial bank in 2009. The NPL is not a local issue only. In fact, it has become a global issue since the Asian crisis of 1997 and this issue has attracted increased attention after the global financial crisis of 2007 2008. Since then, researchers have carried out many studies to find out the determinants of the NPL of banks. Those studies are mainly quantitative analysis, in which static or dynamic panel data are regressed using estimator such as Pulled OLS, Fixed Effect (FE) and Randoms Effect (RE) and GMM either discretely or together. A few studies are, however, conducted using VAR model specially where the feedback effects of NPL on the independent variables are examined. Except for a very few cases, almost all the previous studies used panel data over a period of 5 to 12 years. Some of the previous studies estimate the impact of only macroeconomic variables while some estimate the impact of only bank-specific factors. On the other hand, many of the earlier studies investigate the joint impact of macro and bank-specific variables. The common macroeconomic variables used in the previous studies are GDP growth rate, inflation rate, unemployment rate, exchange rate, weighted average lending rate and share price index. On the other hand, commonly estimated bank-specific variables are credit growth, bank size, loan deposit ratio, management inefficiency, ROA, and ROE. However, some very important issues are missing in all the earlier studies. One very important missing issue is the study of the impact of supply of loanable fund on the loan quality. Loan is a major asset for a bank created using fund, which largely depends on the demand for loanable fund. This asset or use of fund must be impacted by the liability or source of fund i.e., the supply of loanable fund, a major portion of which comes in the form of deposits collected from the depositors by the banks. Another missing component is the analysis of the impact of ICT combining with other explanatory variables for the NPL. Modern lending business uses ICT all the time. The success of lending business largely depends on the proper management of ICT risk of a bank. Similarly, the examination of the influences of risk associated with asset liability management (ALM) is missing in the previous studies though bank business is basically a business of ALM. Previous iv studies have also not estimated the influence of forbearance as far as I know. Banks grant the forbearance, especially in the form of interest waiver, not as an endowment but for facilitating the recovery of loans and advances. So, studies that attempt to identify determinants of NPL should cover the impact of the forbearance too. Nevertheless, quantitative analysis is not enough for identifying the determinants of the NPL even if the impact of the supply of loanable fund, ICT, ALM and forbearance is considered. There are factors such external pressure, internal malpractice, poor corporate governance, aggressive banking etc., which are believed to have significant impact on the NPL but it is not possible to maintain time series data on such factors. To capture the impact of such factors, survey based qualitative study is needed. Though there are some qualitative analyses available in literature on the determinants of NPL, those are not done simultaneously with the quantitative studies. Moreover, previous qualitative studies suffer from two major shortcomings. The first one is the inadequacy of sample size in most of the cases and the second one is the exclusion of conversant respondents. All the previous survey-based studies collected opinion either from bankers or from borrowers or both. But the opinions of the respondents of two very important categories namely, regulators and researchers are not considered in the previous survey-based studies as far as I know. Specially, anonymous opinion of the officials working in the regulatory body is very important because those officials deal with loan performance and have the real clues about the causes of NPL. Therefore, the present dissertation adopts a mixed method of quantitative and qualitative analysis in the investigation of factors responsible for the high NPL of the SCBs of Bangladesh. In the quantitative analysis, a total of 14 hypotheses are tested. These propositions include 5 macroeconomic issues and 9 on bank-specific factors developed through comprehensive review of literature and gap analysis. The macroeconomic factors are real GDP growth rate, unemployment rate, change in real effective exchange rate (REER), stock price index and real lending rate. Note that ‘inflation rate’ has been dropped from the initial specification for its autocorrelation with REER and ΔREER has been used instead of REER for stationary purpose. The bank-specific variables are deposit growth, loan deposit ratio, management inefficiency, credit growth, bank size, capital adequacy ratio, growth of interest waiver, ALM risk management and ICT risk management. Note that I avoided ROA or ROE since SCBs are losing concerns and they depend on continuous budgetary support from the government. However, the quantitative analysis on the impact of supply of loanable fund (represented by deposit growth), growth of interest waiver (as proxy of forbearance), ALM risk management and ICT risk management combining with the impact of other exogeneous and endogenous factors is the first of its kind to the best of my knowledge. In the qualitative analysis, I collected the opinion of 394 respondents with a five-point LIKERT scale against a minimum sample size of 385 required for a large finite population. The survey is conducted among four categories of respondents namely, state-owned banker, borrowers of SCBs, officials of regulatory body involved with offsite and onsite supervision and regulation of the SCBs and researches who usually conduct researches on credit related issues. Survey based qualitative analysis accommodating opinion of regulators and researchers along with that of bankers and borrowers is also the first of its kind as far as I know. I collected primary data v on seven broad issues. These issues are macroeconomic conditions, corporate governance, credit risk management, loan administration, external pressure and internal malpractice, legal and regulatory framework, and competition in the banking industry. The parameters or variables of the issues of macroeconomic conditions, credit risk management and loan administration are designed in such a way that the outcome of the qualitative analysis on these issues can confirm or deny the outcome of quantitative analysis. As for econometric techniques of analyzing the quantitative factors, four estimators namely Pooled Ordinary Least Squares (OLS), Fixed-effect (FE), Random-effect (RE) and Generalized Least Squares (GLS) are used. Moreover, a comparison of the estimations of these four estimators are made through Breusch and Pagan Lagrange multiplier test and Hausman test to find the most efficient result. In the estimation process, model specification is validated though various diagnostic tests including panel unit root test, multicollinearity test, omitted variable test, heteroscedasticity test, autocorrelation test, and cross-sectional dependency test. The estimators mentioned above are used to regress a total of 3 (three) models. The first two models capture the stand-alone impact of only macroeconomic and bank specific variables. The third estimates the joint impact of the bank-specific and macroeconomic factors. For the robustness of the study, GMM estimation is also performed, but the GMM model itself is not significant at conventional significance level of <0.05 in terms of AR(1). On the other hand, technical analysis of qualitative factors is done through principal component analysis (PCA). In the process of analyzing the principal component, I conducted various tests for ensuring a precise result. These include the reliability test of survey data through Cronbach’s alpha, linearity test, sampling adequacy test through KMO Bartlett’s test, data reduction suitability test through Bartlett’s test of sphericity, significant outlier test, data distribution test, communalities test etc. According to the outcome of the panel data regression, a combination of macroeconomic and bank-specific factors explains the variation of NPL ratio of the SCBs of Bangladesh while standalone macroeconomic or bank-specific factors cannot explain the variation. In terms of the significance of individual factors, regression of Pooled OLS, FE, RE and GLS estimators suggest that unemployment rate, real lending rate and change in REER have significant positive correlation with the NPL ratio. This outcome confirms the finding of most of the previous studies. The unpredicted direct relation between NPL ratio and real GDP growth rate, though not unprecedented, is probably the result of business expansion by large borrowers during economic upturn withholding the repayment of current loan. Among the bank specific variables, deposit growth has been found to have an inverse association with the NPL ratio showing the significance of the supply of loanable fund in explaining the variation of NPL ratio, which has not been explored before. Similarly, ALRM and ICTRM are also found to have significant impact on the NPL ratio when assessed combinedly with other traditional macroeconomic and bank specific variables. Other bank specific variables sch as loan deposit ratio and management inefficiency have significant positive association with the NPL ratio as per the estimations. Conversely, credit growth and bank size are found to have significant negative correlation with the NPL ratio. These are all in conformity with the previous findings and the current model specification. Other factors included in the specification namely, stock price index, forbearance, and CAR cannot explain the variation of NPL ratio of the SCBs. vi GMM estimation, though not significant at the level of AR(1) = Pr<0.05, suggests that previous year’s NPL ratio rises current year’s NPL ratio. Regarding qualitative analysis, PCA of primary data reveals that poor corporate governance is the most influential component, which raises NPL. The second influential factor is the inadequacy of legal and regulatory framework and the third one is inefficient loan administration. Other principal components, which intensify the NPL are: adverse macroeconomic conditions; pressure from influential quarter and malpractice by the bankers; poor credit risk management; and unhealthy competition in the banking industry. The paper highlights the need for policy adjustment and operational modification in line with the findings of the quantitative and qualitative analysis. Both the quantitative and qualitative analysis reveals that macroeconomic condition impact loan performance of SCBs. Accordingly, this paper recommends for considering potential movement of exogeneous factors while formulating the lending policies and caring out lending operations. This dissertation also suggests for considering external competitiveness of economy while sanctioning large loans to the exporter borrowers. The discovery of a significant inverse relation between the supply of loanable fund (represented by deposit growth) and NPL ratio warrants the need for building low-cost core deposit base by the SCBs for easing the credit risk management accommodating appropriate risk appetite. Meticulous compliance of internationally best practiced rules and regulations can easily resolve the loan deposit ratio, management inefficiency etc. issues and reduce the NPL. Current study suggests for establishing a formal coordination channel between BB and MoF for improving the capacity of the SCBs specially for maintaining credit quality through improving corporate governance, and controlling external pressure and internal malpractice. Such coordination between these two authorities can help establish compliance and credit culture in SCBs. Nevertheless, there are some more complex issues such as composition of board, disposal of a growing number of pending cases with money loan court, maintaining accountability of the sanctioning authority for concerned NPL, raising bank size by merging losing small banks with larger ones, and ensuring enough punishment for willful defaults. Disposal of these issues requires the reform of legal and regulatory frameworks, which is not possible without strong political commitment.
Application of Information and Communication Technology in Readymade Garments Industry: A Study on Bangladesh Market
(©University of Dhaka, 2023-10-10) Nipa, Nymatul Jannat
The RMG industry is Bangladesh's most visible source of foreign cash, even though the country's economy is mainly dependent on agriculture. Bangladesh's Readymade Garment (RMG) industry has long been recognized as the country's economic "Golden Goose." Its entrance into the RMG sector began in the late 1970s, and it has quickly grown to prominence in the economy. This industry has benefited from export earnings, foreign exchange income, employment development, poverty alleviation, and women's empowerment. Information and communication technology has become an integral part of the textile industry. Employee attendance (clocking in), ERP (Enterprise resource planning) software implementation, computerized cutting machine, CAD/CAM (Computer Aided Design)/CAM (Computer Aided Manufacturing) system for pattern making or plotting, shipment dispatching, online FIT approval, mailing solution, MIS reports preparation, voice chatting, ERP for inventory tracking in manufacturing management, semiautomatic and fully automatic sewing machines, and real-time communication with buyers. Bangladesh has a lot of potential in terms of achieving operational excellence through the use of ICT in a broader sense, but it also has certain potential constraints. In this study, all will be analyzed to understand some revolutionary changes and adaptations of technologies. ICT is seen as a vital instrument for sustainability in the RMG industry rather than a tool for competitive advantage. In the garment sector, the use of ICT for structure, assumptions, process, efficiency, and decision-making leads to improved operational excellence. Bangladesh Garment Manufacturers and Exporters Association (BGMEA), the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) should move quickly to provide technical assistance in ICT infrastructure and implementation in the garment industry. Because only a few garment companies employ ICT on a wide scale, they will have an advantage in achieving sustainability. This study will aim to investigate the breadth of ICT application, existing ICT usages, significant impediments, and overall ICT application prospects in Bangladesh's RMG sector.
Contribution of Bangladesh United Nation Peace Keeping Force to Our National Economy
(University of Dhaka, 2019-10-03) Ahmed, Benazir
This thesis in general describes the effect of UN mission on the police department of Bangladesh from both an organization and individual perspective. The thesis has been divided into two papers, which articulate different research questions addressing the issue of UN peacekeeping mission and its impacts from various points of views. The first paper of this thesis utilizes the sample of 700 police personnel (who went to UN Mission from 1989 to August 2018) to find out the impact of the participation in UN mission on the organizational change and financial security & perception of service quality of the police force of Bangladesh. Furthermore, the paper highlights the importance of organizational change in the police force with a view to using the former UN peacekeepers to promote the change in the current trend of organizational process. Specific barriers and factors which have the potential to bring about changes in organizational system and individual integrity of the police force have also been rigorously discussed in this paper. The second paper of this thesis demonstrates the impact of personal integrity and financial security gained from the UN missions to formulate correlation with corruption regarding the jobs of the police force. In the second paper, the correlation between corruption with personal integrity & financial security has been analyzed after controlling for gender, age, educational levels and ranks. This study has focused on the participation of Bangladesh police in the united nation peacekeeping mission with a view to assessing the impact on organizational change and financial security & perception of service quality. Both qualitative and quantitative approaches were applied to gather useful insights about the benefits of participation in the UN peacekeeping mission. This study has used some form of statistical analysis such as descriptive statistics, quasi-statistics,and narratives to presents the findings. The findings of this study reveal that the impact of UN Mission works in individual level of changes; organizational changes are also evident after the experiences in the UN Peacekeeping Mission. The standard policing, pragmatic training program, digital working environment, prompt action against the complaint, respect for the profession, strong adherence to time line, structured and integrated working system etc. are very much evident with the UN Peacekeeping veterans. Findings also reveal that the UN Peacekeeping Mission helps to change the mindset of police members and creates the opportunity to ensure good governance and to protect the rule of law of the home country. A strong commitment is developed to the police organization to serve the nation. UN Peacekeeping Mission is a kind of training field in learning sensitivity, sensibility as well as humanity. Learning and adapting new technologies in the UN Mission have a great impact on the overall organizational change. New technologies (Digital forensics, Office It, Drone, most modern communication system, Armor Personal Carrier, advance weapon systems, sophisticated surveillance and operational equipment) help to work effectively and efficiently. Therefore, the key theme of this study is discovering the amount of application of the learning from the UN Peacekeeping mission to bring about a positive organizational change in the police service of Bangladesh. In such perspective, the responsibility of the home police service is just to support and sponsor the change. Alignment of proper learning from the UN Peacekeeping Mission with the proper application of that learning in the own country can be a great asset for the country. The UN compensation rates for peacekeeping operations are attractive to Bangladeshi soldiers and police. The incomes they derive from the mission invest in different asset making activities. Among potential area of investment, land purchase ranked top as the key investment area to both male and female former UN peace keepers. Findings reveal that 46% male and 47% female have invested their income from UN Peace Keeping Mission in land purchase. Saving account is the second key area of investment of their income. 23% male and 26% female peace keeper have opened saving account by their peace keeping mission income. Perception about financial security across gender is showing that 71% male and 69% female think that the peacekeeping mission enhanced their financial security.
Corporate Capital Structure Decision in Private Sector Industrial Enterprises in Bangladesh
(©University of Dhaka, 2024-01-03) Huq, Begum Ismat Ara
Efficiency and effectiveness of microcredit management in Bangladesh: a comparative analysis on public and private sectors
(University of Dhaka, 2015-03-25) Ali, Mohd. Sher
Bangladesh is the birthplace of microcredit. Different countries are adopting Bangladeshi model to reduce poverty. To evaluate the achievements of microcredit a huge number of studies have been conducted. But it is necessary to discuss the comparative performance of private sector and public sector in which dimension shows the best performance in microcredit management. The broad objective of the study is to evaluate the management systems of microcredit in Bangladesh. The objectives are specified as (1) to investigate into the various microcredit management systems in Bangladesh; (2) to compare public and private sectors’ interest rates; (3) to evaluate the training provided by the microcredit providers; (4) to evaluate the collateral systems both private and public sectors; (5) to evaluate the use of microcredit both the sectors; (6) to compare the income change of microcredit recipients of public and private sectors; (7) to identify the problems of microcredit management; (8) to suggest major recommendations and put forward policy implications based on the findings of the study. Randomly selected 125 borrowers from two areas are interviewed. Borrowers use credit money for cultivation and small business. About 70% borrowers use credit at least 5 years. Private sector borrowers have to pay weekly basis installment in a fixed place where as public sector borrowers have liberty to repay installment at anytime at the office or another place fixed by the authority. Borrowers (56%) of the study areas prefer public sector and only 44% prefer private sector. The literacy rate of the borrowers’ is more than 80% i.e. more than the national achievement and it is higher in the case of public sector borrowers’. The borrowers who get loan from public sector organizations, expend 135% more in education than before getting credit, where as result is reverse in the case of private sector. The expenditure in education decreases by 10% for the private sector borrowers’. Borrowers about 20% purchase land after getting credit and more than 70% borrowers now save to bank or cooperatives. Borrowers (100%) drink safe water, cast vote in election and sleep on cot or choki (lower level wooden cot) and about 97% borrowers have access to modern health services in the case of sickness. Still about 25% families face child mortality. In the case of electricity use, public sector borrowers are in privilege position and in an average, about 60% borrowers’ family use electricity. Microcredit has empowered the borrowers also socially, because 30% public sector borrowers became candidate in local level election (union parishad, management committee of educational and religious institute, club etc.). Only 4% private sector borrowers become candidate in local level election. It is significant that the income of the borrowers’ increase more than 100% in comparison to before getting credit. In the case of public sector the income increase is 133% and 53% for private sector. The 38% borrowers claim that they would be able to improve their lives if credit is provided with less than 10% interest and 34% demand loan without interest. Among the rest of the borrowers 18% want allotment of land and 10% claim grant money. The study’s aim is to compare the management systems of private and public sector microcredit of Bangladesh. Within few exceptions private sector organizations like, ASA, BRAC, and Samadhan are charging interest more than 20%. But GB’s rate is 20% flat. Due to weekly installment the actual interest rate is higher than 20%. Private sector bank IBBL claims 10% profit that is the lowest among the selected private sector organizations. Department of Youth Development charges 10% service charge with reducing balance method. BRDB and BKB implement general and special credit programs of the government and claim interest/service charge prescribed by the government. Government gives emphasis production of different crops and demand only 4% service charge. On the other hand, the government has various incentive programs and claims interest accordingly. Government implements these programs through BRDB or BKB or by other government departments. But BRDB charges 11% flat rate interest for its own fund and 27% for the fund borrowed from commercial banks. BKB normally charges 10% flat rate and 14.5% interest for its own fund. NGO Samadhan and BKB don’t have any training program though BRDB provides training for special cases. All other public and private sectors have training program for capacity building and motivation. BRDB and BKB don’t have scope to sanction loan without collateral either land or FDR. Other organizations both public and private sectors sanction credit without collateral but they have savings program that indirectly treated as collateral. In the public sector only BKB supervise credit use though all of the private organizations closely monitor credit use. Only Department of Youth Development of public sector and all other private sector organizations give chance to the borrowers an additional grace period if the borrowers fail to repay on time. Public sector borrowers have no insurance coverage but all private sector organizations provide insurance coverage. Rebate on interest is given to the borrowers by the microcredit agencies as an incentive for advance repayment. Normally, it is practiced there where flat rate of interest is claimed but for reducing balance system, rebate on interest is in built. IBBL gives the highest (2.5%) rebate on profit and BKB’s rate of rebate is 2% but Department of Youth Development and GB have no scope though others have limited scope. Savings ultimately plays role as collateral as well as insurance. Recovery rates of the selected agencies in present study are 80% and above. It is significant that BKB’s local recovery rate is 100%. BRDB and Department of Youth Development’s recovery rates are below 90% whereas private sector’s recovery rates are above 90%. Due to the inappropriate credit policy the rural poor could not get adequate credit from a single source. So, overlapping is taking place and the borrowers enjoy relative advantages from both the sectors. It is found that microcredit increases the socio-economic status of the borrowers and the borrowers increase their income utilizing microcredit. Private and public sector microcredit organizations established a parallel money market in the rural areas, which is actually the better replacement of usurious money lenders. So, microcredit organizations increased rural indebtness and fail to reduce dependency on credit. Due to the availability of private and public sectors microcredit organizations, borrowers are also using credit from similar organizations simultaneously. They prefer public sector organizations’ credit though they enjoy different incentives from private sector. Microcredit organizations always give emphasis on safe recovery of credit and target borrowers considering safe recovery. So, assetless hardcore people are hardly come under credit activities. Group based activities and changed livelihood have increased the social empowerment of the borrowers. Actually microcredit is not collateral free. Savings and group responsibility become collateral against credit. Rural level capital formation through institutional savings is a significant development in rural economy and positive change of development indicators means the borrowers’ livelihood is on the positive track. Considering the analysis to make microcredit programs both private and public sectors effective and borrowers-friendly, some policy recommendations are suggested as: (1) rate of interest of microcredit need to fix below 15% as decreasing balance method and both public and private sector organizations must follow the similar rate, (2) government and non-government organizations should take special initiative for poverty reduction program aiming ultra-poor and assetless people lifting their livelihood with zero rate of interest, (3) private sector organizations should start recovering the loan after six months from disbursement so that the borrowers can have a reasonable time to generate some income before starting repay, (4) for income generating activities monthly installment may be introduced. But in the case of production based investment like, crop production, installment should be fixed after harvest or completion of production process whatever the time may be, (5) size of loan must be raised initially at per economic demand of the borrowers, (6) vocational knowledge should be provided to the borrowers and according to the training capital goods can be provided instate of cash capital in the initial stage, (7) government should introduce rules and regulations not to control the NGOs but to ensure transparency and accountability for the sake of mass population, (8) internal efficiency of MFIs need to improve not for the sake of their own but in favour of the borrowers, (9) to avoid the overlapping problem the operational areas of different MFIs should be separated, (10) borrower households should be given interest free education loan from the obligatory savings deposit fund of borrowers to achieve the objectives of education and human development, (12) in the case of youth borrowers, literate and potential male and female persons must be undertaken into credit program to make the loan more effective. So, the government can consider the implementation of recommendations in order to ensure the efficient and effective management of microcredit.
Efficiency Measurement of Commercial Banks of Bangladesh
(University of Dhaka, 2019-10-02) Hasan, Mostofa Mahmud
Impact of Climate Change and Financial Risks on Coastal Tourism in Bangladesh
(© University of Dhaka, 2026-04-13) Nowreen, Samshad
Bangladesh is embedded with diversified natural attractions, seasonal beauty, and different physiographic characteristics. Moreover, the country has a long coastline in the south with three major types of distinct land formations and biodiversity. These salient features of natural attraction ramify nature-based tourist destinations in the world. However, natural calamity along with the major threat of climate change induces natural disaster that threatens the top tourist destinations of Bangladesh, such Cox’s Bazar or Kuakata or the Sundarbans. It hinders the tourism growth of the neighboring countries of Bangladesh. Therefore, the research identifies the climate change impact on coastal tourism of Bangladesh, and the financial risks in coastal tourism arising from climate change. To conduct this research, mixed-methods research design that is predictive and explanatory in nature. Three distinct study areas had been selected for the research based on their physiographic condition. Two types of data were collected and analyzed: secondary data on climatic variables and images of vegetation coverage of the study areas, and financial data from five banks, all obtained from authentic and reliable sources. Moreover, a primary survey for an in-depth interview with 20 respondents had also been conducted. After triangulating and analyzing time series, results show that slow, gradual climate change is occurring across all climatic elements, triggering different types of calamities in the study areas. The Tourism Climate Index (TCI) model was used to analyze and predict future comfort seasons for travel in the study areas. Mostly, though the trend of rising temperatures is very low at present, it would be higher in the near future if Business As Usual (BAU) continues. As such, among the three regions, the top outdoor tourism and recreation destination of Bangladesh would experience the greatest rise in temperature, with prolonged and higher precipitation rates. Furthermore, the rise in hot weather has spread across the area over the last forty years, with a declining trend in v vegetation coverage across the whole area. There is an increasing rate of depositional landforms. Furthermore, TCI model shows that although Cox’s Bazar is the top-ranked outdoor tourism destination at present, it would gradually decline as it becomes less favorable to tourists because of the shrinkage of the tourist season, and the excellent tourist season would become moderate to tourists as climatic conditions will have higher temperatures, more cloudy sky, an increased rate of precipitation and windy weather. Consequently, analyzing credit risk by developing a model of TCI risk factors for bank loans, it has been identified that the risk factor for Cox’s Bazar will be the highest. Different banks will have different types of credit risks based on the model developed for the “Tourist Climate Index Value at Risk (TCI-VaR)”, which has found that credit lending for a prolonged maturity period would entail greater credit risk, which is currently neglected. It would be between 2.62% and 3.71% for 10-year and 5-year debt (10 million BDT), reflecting the impact of climate change. Kuakata would have a very low, rising trend in temperature and precipitation, though it is negligible at present. There is also widespread hot weather across the area. After using the TCI model to analyze tourists’ comfort in the study area, it shows that, though the tourist season would shrink, Kuakata would remain a more favorable place for outdoor or beach tourism, with excellent climatic conditions from November to March. In terms of investment, Kuakata would be least affected by climate change, as the TCI risk factor has been identified as negative. Thus, TCI-VaR credit risk will be -0.05% per 0.1 million BDT in debt for tourism. However, most banks do not lend money for tourism or recreational projects for tourists in this area, as Kuakata, as a tourist destination, is still neglected. Finally, the temperature and precipitation in Shatkhira show a rising trend upto year 2100. Moreover, the vegetation coverage has been gradually declining with wetlands. However, if other variables remain as control variables (such as deforestation, land encroachment, and vi hunting) due to climate change, this area would remain favorable for tourists, with very good climatic conditions from December to February, for the next eighty years. Furthermore, in terms of investment, the Sundarbans would be less affected by climate change, as the TCI risk factor has been identified as moderate. Likewise, Kuakata has also been neglected and has not burgeoned into a tourist destination. Banks would have to face a credit risk of 0.40% over 3 years for a 0.1 million BDT loan, which has been neglected as a aftermath of climate change. Therefore, from the research, it is clear that different study areas require different policy formulations for investments and tourism development zoning. The top tourist destinations in Cox’s Bazar are in a high-risk position for investment in outdoor or beach tourism due to climate change. Conversely, this research identifies other coastal destinations that would remain comfortable for outdoor tourism-based activities over the next hundred years. However, there might be other factors that degrade the destination; yet, policy formulation to keep the destination rich in natural resources is very urgent at present for sustainable tourism development. Besides, Cox’s Bazar, which is considered the top revenue-generating destination of Bangladesh, should be slowly transformed into an amalgamation of man-made and natural destinations to sustain development and preserve its top position.
Impact of Initial Public Offerings on Capital Market Development of Bangladesh
(© University of Dhaka, 2025-07-08) Hossain, Md. Iqbal
This thesis conducts a comprehensive analysis of the impacts of Initial Public Offerings (IPOs) on the development of the capital market in Bangladesh, which is recognized as one of the fastest-growing economies in South Asia. In this context, the increasing capital needs of entrepreneurs are primarily met by state-owned and private commercial banks, as well as non banking financial institutions, due to the underdeveloped nature of the stock market. Bank financing is influenced by monetary policies, particularly the bank rates set annually by the central bank. While some studies highlight the necessity of strengthening the debt and equity securities market to support Bangladesh's rapid economic growth, there are ongoing debates about the extent to which the capital market contributes to the development process by providing alternative financing sources for entrepreneurs through public and private offerings. To bridge this understanding gap, I examine the impacts of Initial Public Offerings on the development of Bangladesh's capital market through a meticulous examination of primary and secondary data sources, including closed-end questionnaire, IPO Prospectus and regulatory documents from different stakeholders of the capital market i.e., Ministry of Finance, BSEC, BB, DSE, CSE, published articles, daily newspapers etc. and use annual data from 1994 to 2023. Employing multiple regression analysis, I find that IPO financing, unemployment rate, foreign portfolio trade, and DSE Broad Index significantly and positively influence the Market Capitalization to GDP ratio of the capital market of Bangladesh. Notably, foreign portfolio trade exerts the largest effect on the Market Capitalization to GDP ratio, followed by IPO financing, unemployment rate and DSE Broad Index. The findings underscore the need to encourage more quality IPO issuances by addressing the barriers that deter large companies, including multinational corporations and state-owned entities, from pursuing public financing. Additionally, increasing the size of issuances and ensuring the proper utilization of IPO proceeds are essential steps to further develop the capital market of Bangladesh.
Role of Private Commercial Banks in Accelerating the Economic Growth of Bangladesh
(©University of Dhaka, 2023-02-09) Tasneem, Sara
Economic growth is the single most contributory matter in the economic development process. Economic growth unpretentiously determines the economic wellbeing of any country. Economic growth portrays the performance of an economy. Growth ensures the utilization of natural resources, expansion of productive services, creation of employment opportunities and better standard of living. Bangladesh economy is growing at an impressive pace. Economic environment of Bangladesh is highly optimistic and projected growth of gross domestic product (GDP) is robust. Behind the satisfactory growth rate, the financial system of Bangladesh has contributed among other factors. The financial system and economic system of a country are inseparably linked. The performance of the system determines the status of the economy. In many countries including Bangladesh, commercial banks dominate financial system. But for the last few years, banking sector of Bangladesh is passing critical time. In this critical time, the performance of private commercial banks (PCBs) is satisfactory among the scheduled banks. In future, acceleration of economic growth will take place along with greater capital accumulation for which PCBs have to maintain their efficiency level for promoting growth. Hence, the significance of the role of PCBs is immense for economic growth. The study has conducted an in-depth review of the existing theoretical and empirical literatures critically and discovered a significant gap in the problem area. Despite notable studies on economic growth, relation between financial system and economic growth, and commercial bank no specific attempt has been made to focus the role of PCBs to economic growth acceleration in Bangladesh. There exists a mentionable space in identification of the Demand Following or the Supply Leading hypothesis for Bangladesh economy. A gap in examination of economic growth of Bangladesh has also been noticed. Hence, the study aims at the examination of the role of PCBs to accelerate economic growth, investigation of the pattern of economic growth and detection of Supply Leading or Demand Following hypothesis in Bangladesh. To investigate the role of PCBs in accelerating the economic growth of Bangladesh, the study has proposed a model after reviewing the literature critically. The model has detected the dependent and independent variables and uncovered the interactions among the variables. The variables, i.e., nominal GDP, real GDP and per capita nominal GDP resemble economic growth and has been considered as dependent variables. To portray the role of PCBs, the model has considered net loan and advances of PCBs, investment by PCBs, export earnings by PCBs, number of branches of PCBs, total income of PCBs and non-performing loan of PCBs as independent variables. Finally, the study has derived seven hypotheses from the model. The present study is causal in nature as the purpose is hypotheses testing and has exposed properties of scientific approach ‘Hypothetico-Deductive’. As the purpose of the study is to analyze the role of PCBs, the population consists of all PCBs. The study has conducted the nonprobability sampling design particularly the judgement sampling technique. Due to unavailability of data, the sample size (38) of this study is all PCBs except ICB Islami Bank Ltd. and Simanto Bank Ltd. The study has required quantitative information from secondary source. To meet the objectives, time series data have been required. The study has covered a period of 34 years i.e., 1984 to 2017. Data analysis of this study is econometric in nature. A constructive role of PCBs to accelerate economic growth has been hypothesized. Before estimation of the proposed model, stationarity test has been conducted. The decision whether the variables are stationary or nonstationary at level and difference form, the widely used Augmented Dickey-Fuller (ADF) test along with Dickey-Fuller and graphical tests have been applied. The study has proceeded based on the findings of ADF test as it is widely recognized test of unit root. The variables, nominal GDP, real GDP and per capita nominal GDP, net loan and advances of PCBs, investment by PCBs, export earnings by PCBs are stationary at 1st difference, i.e., I(1) at 95% confidence interval. The variables, number of branches of PCBs, total income of PCBs and non-performing loan of PCBs are stationary initially I(0). The selection of ARDL model has followed the results of stationarity diagnostic. The ARDL model has been applied to the three measures of economic growth, i.e., nominal GDP, real GDP and per capita nominal GDP. The reason behind the estimation using three measures is to detect the true impact and role of PCBs to economic growth. As, detection is not error free, 5% level of significance has been accepted in measurement process. However, in the three estimated ARDL models, the optimal lag has been selected applying mostly used criteria viz; AIC and SBC. The values of AIC in the three ARDL models were lowest among top 20 models. Cointegration has been checked by bounds test. The models were free from serial correlation. The study has satisfied with the models as those were homoscedastic in nature and the residuals are normally distributed. The models were free from misspecification. So, the models were correctly specified and stable. The results have revealed long run association between economic growth and private banking functions. The long run coefficients of net loan and advances, export earnings by PCBs and banks’ investment are statistically significant to economic growth for all three models. The variables, number of branches, net loan and advances, export earnings of PCBs, investment by PCBs at one year lag, have been observed to influence the current year’s per capita GDP. In the long run, real GDP and per capita nominal GDP have been influenced by previous year’s values. PCBs have significant contribution to economy in the short run. The estimated three models have supported the view of slow adjustment to long run equilibrium due to any shock in the short run. The recovery to long run stability has proceeded slowly. Economic growth has been hurt despite smooth support of PCBs. Any shock in current year has impeded the cointegration of PCBs and economic growth in succeeding years. The study has recommended policies both for the contributory and noncontributory functions of PCBs. A decade-wise investigation has been conducted for three conventional measures of economic growth namely nominal GDP, real GDP and per capita Nominal GDP. To investigate the pattern of economic growth, time series graphs have been drawn. To disclose the trend, linear trend models have been estimated. The study has revealed positive trend of nominal GDP, real GDP and per capita GDP over the decades. Economic growth in Bangladesh is on an increasing path and remarkably stable. The positive trend of nominal GDP, real GDP and per capita GDP has proved the national endeavors despite the impediments to growth in different decades. The study has suggested policies to augment economic growth in future. The study has applied the Granger Causality test to detect existence of either the Demand Following or the Supply Leading hypothesis. It has estimated the pair-wise regressions for three dependent variables and six independent variables. The causality test has revealed a mixture of Demand Following and Supply Leading hypothesis between the development of PCBs and economic growth. The study has recommended that measures should be taken to develop PCBs and economy proportionally.
The Impacts of Dividends on Stock Prices: An Analysis on DSE Listed Firms
(©University of Dhaka, 2024-01-03) Misir, Mohammad Abu
Transmission Mechanism of Monetary Policy: The Effect on Bank Competition
(© University of Dhaka, 2026-04-19) Abedin, Sultana Shahida
The changes in monetary policy affects the channel of bank lending directly as by the change of interest rate banks are given the signal of lowering the flow of loanable funds to the prospective borrowers if the interest rate is set higher by the policy makers. Some recent studies have confirmed that in the economy where banks are competitive with each other, the lending channel has comparatively minor adversity by the interest rate change. The primary objective of this study is to find out the effect of the change of monetary policy on banks when they are competitive among themselves. To obtain this objective, the measures of bank competition would be calculated and then they would be tested via empirical model to find out the effect interest rate change on banks when they are in a competitive situation. Finally, there will be comparative analysis between Western and Eastern regions‟ banks. In this study, 10 countries were selected, a mix of developed and developing, to see whether the banks are competitive or monopolistic and finally how the demand for loanable funds gets affected by the monetary policy change. To measure the competition Panzar- Rosse H statistics were calculated and the bank level data are collected from Bankscope. To analyze the impression of competition on bank lending channel the empirical model of Ehrmann et at (2003) was adopted, which is been followed by many other studies as well. As the data covered the global financial crisis era, to check whether the banks‟ competition could have the same impact on bank loan supply through and afterwards the catastrophe, the samples were divided into two groups – during and after the crisis, and the model was tested again. Interestingly the countries where there is monopolistic competition show less sensitivity compared to those which have no competition among themselves for interest rate change. It was observed that, during global financial crisis, bank competition cannot perform strongly to x | P age xi | P a g e combat the policy rate changes by ensuring their loanable funds‟ demand to be fulfilled smoothly and banks of eastern region needed more time to heal even after the crisis period. The study overall proves that the monetary transmission mechanism gets weaker when the banks are competitive in a country and suggests the policy makers to come up with some alternatives to preserve the true intention of Monetary Policy Change.