Impact of Liquidity on Profitability: A Study on the Commercial Banks in Bangladesh

Paul, Sujan Chandra; Bhowmik, Probir Kumar; Famanna, Mehbuba Nayan

doi:10.47260/amae/1114

Cited by 13 publications

(13 citation statements)

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“…If a company determines large assets, it is likely that what will occur at the level of liquidity will be safe, but the expectation of getting large profits will decrease which will then have an impact on company profitability or vice versa. In Paul et al, (2021), he also argues that it strengthens that liquidity has a significant effect on profitability.…”

Section: Figure 1 Construction and Property Sector Performancementioning

confidence: 96%

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The Effect of Capital Structure, Diversification Liquidity and Company Size on Profitability Property Sector Companies Indonesia

Santoso¹,

Muazaroh²

2023

IJEBMR

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This study was conducted to examine the effect of the variables of Firm Size, Liquidity, Equity Structure, and Diversification on Profitability in Property Sector Companies listed on the Indonesia Stock Exchange for the 2019-2021 period. The sampling technique used was purposive sampling and obtained a sample of 63 companies. The data analysis technique used is multiple linear regression tests. The results showed that the structure of equity has negative effect on Profitability and firm size has positive effect on profitability, while diversification and liquidity had no significant effect on profitability. The implications of this research for managers must be careful when adding debt because the amount of debt will burden interest costs which has an impact on reducing profits and size is matter on profitability of property sector. The larger the assets of the property company the greater the profit obtained

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Section: Figure 1 Construction and Property Sector Performancementioning

confidence: 96%

“…Based on previous research studies and gap analysis of research Arista & Topowijono (2017), Paul et al, (2021), Sari (2019) and Rohmah (2020), so it is interesting to carry out further research to analyze the profitability of the property sector. In this study, it will be investigated…”

Section: Figure 1 Construction and Property Sector Performancementioning

confidence: 99%

The Effect of Capital Structure, Diversification Liquidity and Company Size on Profitability Property Sector Companies Indonesia

Santoso¹,

Muazaroh²

2023

IJEBMR

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“…Ibrahim and Aqeel (2017) suggested an optimum utilization of available liquidity for the purpose of increasing bank's profitability and also gave recommendation to the banks for adopting a perfect framework of liquidity management for assuring sufficient liquidity (Ibrahim & Aqeel, 2017). Paul, Bhowmik, and Famanna (2021) aims to examine the impact of liquidity on commercial bank's profitability for the year 2009-2018 in Bangladesh. A sample of forty commercial banks was collected for their study and the data were collected from the annual reports of that selected banks.…”

Section: General Considerationmentioning

confidence: 99%

“…The explanatory variables are as deposit to asset ratio, cash equivalent to deposit ratio, loan to deposit ratio, current ratio, and the liquidity assets ratio. By applying the multiple regression models their study found out that there is a positive and significant relationship between liquidity and profitability of commercial banks in Bangladesh (Paul et al, 2021). Charmler, Musah, Akomeah, and Gakpetor (2018) claimed that liquidity is positively associated with return on assets (ROA) as well as there is a weak positive relation between the ratios of liquid assets to total assets regarding return on equity (ROE).…”

Section: General Considerationmentioning

confidence: 99%

Effect of Liquidity on Profitability of Banks using Revisited Panel Data Analysis: Does Ownership Structure Matter?

Begum

Rashid

Haque

et al. 2022

5007

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This study aims at examining the effect of liquidity management on the profitability of Bangladesh banks. To accomplish this objective, 32 banks of Bangladesh including second and third generation banks are taken as a sample. The secondary sources of data have been used for this study which are collected from the annual reports. Hausman specification test is run to identify the appropriate model which suggests that random effect model is suitable for this study. This study focuses on ROA, ROE and EPS as a denominator of profitability. Current ratio is found to have a positive impact on profitability of bank whereas capital adequacy ratio, interest rates are also found to be statistically significant for influencing the performance of the bank. Thus, this study suggests that proper management of liquidity will raise the profitability of the banks and the findings of this study will be helpful for the policy makers to solve the problems in respective field.

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“…The results suggested that if the firm can manage the working capital in cash, accounts receivable, and inventories properly, it will ultimately increase the profit. Paul, Bhowmik, and Famanna (2020) examined the impact of Liquidity and Profitability on the Commercial Banks in Bangladesh. Liquidity is used as an independent variable, and profitability is used as a dependent variable loan to deposit ratio, deposit assets ratio, call deposit receipt, and loan to asset ratio.…”

Section: A Peer-reviewed Journal Of Management and Economicsmentioning

confidence: 99%

Liquidity and Profitability of Low and High Turnover Commercial Banks in Nepal

Goet

2021

Management Dynamics

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This paper explores the effect of several bank-specific variables, including capital and liquidity, on the profitability of listed commercial banks operating in Nepal. Factors of banks’ profitability like net profit ratio, return on assets, and return on equity have been assessed by the panel data (10 observations) of six listed banks out of twenty-seven banks. In this study, liquidity has been quantified in regulatory capital, loan and advance to total deposit, liquid assets to total assets, liquid assets to total deposit, and cash reserve ratio. This study found a significant correlation between liquidity variables and profitability variables. Again, it has been shown that the cash reserve ratio significantly impacts the net profit ratio, return on assets, and equity. Likewise, loan and advance to total deposit, liquid assets to total assets, and liquid assets to total deposit have no significant impact on the selected banks’ net profit ratio, return on assets, and return on equity.

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Impact of Liquidity on Profitability: A Study on the Commercial Banks in Bangladesh

Cited by 13 publications

References 0 publications

The Effect of Capital Structure, Diversification Liquidity and Company Size on Profitability Property Sector Companies Indonesia

The Effect of Capital Structure, Diversification Liquidity and Company Size on Profitability Property Sector Companies Indonesia

Effect of Liquidity on Profitability of Banks using Revisited Panel Data Analysis: Does Ownership Structure Matter?

Liquidity and Profitability of Low and High Turnover Commercial Banks in Nepal

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