Effect of Financial Determinants on Return of Assets (ROA) in Islamic Bank of Bangladesh

Abstract

ROA is an important metric for evaluating the financial performance and indicates the profitability and efficiency of an Islamic bank in utilizing its assets to generate profit. This study empirically examines the Effect of financial determinants on Return of Assets (ROA) in Islamic Bank of Bangladesh. The data for this study from 2015 to 2021 is based on the annual reports of each Islamic bank. The effect of financial determinants on Return of Assets evaluated using Fixed effect model and Random effect model under the Multiple Regression Analysis. The outcome of this study is that the relationship between financial indicators (EPS, capital adequacy, share price, cash, equity to total assets, book value per share, price to book value, and cost to income) and Return on Assets (ROA) in the Islamic banking sector of Bangladesh differs between the fixed effect and random effect models.