Factors Affecting Profitability: An Emperical Study on Islamic Banks in Bangladesh

Abstract

This study investigates the impact of internal and external factors on Islamic Bank’s profitability in Bangladesh from 2008-2016. For this purpose bank-specific variable is used as internal factor and macro-economic variable is used as external factor. In this study , a sample of 07 Islamic Shariah based Banks have been taken.Return an assets is used as proxy of profitibility and capital adequacy, bank size, asset structure, expenditure management, asset quality, liquidity, and economic indicator are used as a proxy of independent variable.The empirical findings of this study shows that asset structure, capital adequacy, and asset quality are the crucial factors in determining the profitability of Islamic Banks in Bangladesh.The findings of this study suggest that if islamic banks concentrate more on these variables, they would be able to generate better profitability in the present globalised era.