The impact of Research and Innovation Investment on Bank’s financial performance: A study on Mutual Trust Bank Limited, Bangladesh

Abstract

Research and development activities start and encourage new production, raise the level of knowledge, and introduce fresh approaches to the production and application of technology. The current study reveals the diversified behavior of factors influencing the performance of banks and R&D investment associations. The study applied a descriptive research design and targeted Mutual Trust Bank Limited Bangladesh, all with data spanning five years between 2017 to 2021 with secondary data by employing a panel regression analysis model. Seven factors affecting banks financial performance were selected and analyzed. In the study, Return on asset and Return on equity are used as Bank performance measurement tools and Dividend yield ratio, Dividend cover ratio, Price earning ratio, Capital gearing ratio, Research & development intensity ratio, Firm size ratio and Leverage ratio are used as research & innovation investment indicators. The result of panel data regression analysis showed that Dividend yield ratio, Dividend cover ratio, Capital gearing ratio, and Leverage ratio had negative and statistically significant impact on banks financial performance. Whereas, Price earning ratio, Research & development intensity ratio and Firm size ratio had positive and statistically significant impact on banks financial performance. However, Leverage ratio and Dividend cover ratio had no statistically significant impact on banks financial performance for the tested period. Therefore, the research and innovation investment are positively affecting the banks financial performance.