THE DYNAMICS OF NON-PERFORMING LOANS IN THE ISLAMIC BANKING SECTOR OF BANGLADESH: A QUANTITATIVE ANALYSIS

Authors

  • Md. Asad Iqbal Chowdhury Assistant Professor, Department of Economics and Banking, International Islamic University Chittagong, Chattogram, Bangladesh
  • Mohammad Shamsuddin Assistant Professor, Department of Business and Technology Management, Islamic University of Technology, Gazipur, Bangladesh
  • Habib Ullah Assistant Professor, Department of Business Administration, International Islamic University Chittagong, Chattogram, Bangladesh
  • Monir Ahmmed Associate Professor, Department of Economics and Banking, International Islamic University Chittagong, Chattogram, Bangladesh

Keywords:

Non-Performing Loans, Islamic banking, Bangladesh, Bank-specific factors, Macroeconomic factors, Loan growth, Loan-to-asset ratio, Net interest margin, GDP growth, Inflation

Abstract

Non-Performing Loans (NPLs) is a critical issue that affects the performance of Islamic banking
in Bangladesh. This study aims to investigate the determinants of NPLs in the Islamic banking sector of
Bangladesh, considering both bank-specific and macroeconomic factors. Data were collected from annual
reports and World Development Indicators from 2007 to 2018. Regression analyses and diagnostic tests
were conducted to analyze the data. The results indicate that loan growth, loan-to-asset ratio, and net interest
margin are significant factors that reduce NPLs, while capital adequacy ratio has a positive but insignificant
impact. Macroeconomic factors such as GDP growth and inflation also significantly influence NPLs. The
study suggests that reducing NPLs is crucial for the management and regulatory bodies of the banking
industry, and strategies need to be developed to address the identified factors. The study contributes to the
existing literature by considering a long-period database and examining both bank-specific and countryspecific variables

Published

2022-10-11

How to Cite

Asad, I. C., Mohammad , S., Habib, U., & Monir , A. (2022). THE DYNAMICS OF NON-PERFORMING LOANS IN THE ISLAMIC BANKING SECTOR OF BANGLADESH: A QUANTITATIVE ANALYSIS. SADI International Journal of Management and Accounting (SIJMA), 9(4), 24–40. Retrieved from https://sadijournals.org/index.php/SIJMA/article/view/350

Issue

Vol. 9 No. 4 (2022): October- December

Section

Original Peer Review Articles
Copyright & Licensing