A Comparative Study on Financial Performance Analysis Among Selected State-Owned Banks, Private Commercial Banks, and Islamic Banks of Bangladesh

Abstract

This study investigates the comparative financial performance of selected banks in Bangladesh by employing two regression models with Return on Assets and Earnings per Share as dependent variables. Drawing on the Efficient Structure Hypothesis, the analysis evaluates whether efficiency-related factors better explain variations in performance compared to ownership structure. Using a balanced panel dataset of 30 bank-year, the study examines the impact of Return on Equity, Non-Performing Loans, Capital Adequacy Ratio, and Earnings per Share, while controlling for ownership categories State-Owned Commercial Banks, Private Commercial Banks, and Islamic Banks. The results reveal that Earnings per Share is the most significant determinant of Return on Assets, with a one-unit increase in Earnings per Share leading to a 0.067 rise in Return on Assets (p < 0.001). In contrast, Return on Equity, Non-Performing Loans, and Capital Adequacy Ratio show no statistically significant effect on Return on Assets. For the Earnings per Share model, only Return on Assets emerges as a strong predictor, while other variables remain insignificant. Ownership structure, though positive for Private Commercial Banks and Islamic Banks, is not statistically significant once efficiency indicators are included. These findings provide strong empirical support for the Efficient Structure Hypothesis, highlighting that efficiency rather than institutional form drives bank profitability in Bangladesh. The results suggest that policymakers and regulators should prioritize reforms aimed at enhancing operational efficiency and earnings capacity. For practitioners, strategies such as cost optimization, revenue diversification, and digital transformation are essential for sustaining profitability in a competitive financial landscape.