Determinants of Non-Performing Loans of Banks in Bangladesh: An Exploratory Study


  • Firoja Akter Khanam Chittagong University
  • Kamrul Hasan American International University - Bangladesh
  • A.K.M Nurul Afsar Global Islami Bank Limited


Non-performing loan, Bank Specific factor, Macro- economic factor, panel data models


This paper aims to explore the bank-specific and macroeconomic determinants of non-performing loans (NPLs) in the banking sector of Bangladesh using Ordinary Least Square regression model draws from EViews 10. The study undertakes 20 Commercial banks including 16 private commercial banks, 2 public commercial banks and 2 foreign banks and the period covers 11 years data ranging from 2009-2019 and uses 5 bank-specific and 2 macroeconomic variables to assess the impact of banking management and economic indicators on NPLs. The bank specific data are obtained from the Annual Report of the sample bank. The macro- economic data are collected from Economic Indicators Sections of Bangladesh Bank. The empirical result shows that at the macroeconomic level the economic growth as measured by gross domestic product significantly impacts the NPLs of banks. In case of bank specific factors operating inefficiency, bank size, liquidity, capital adequacy ratio, and profitability are found to control the NPLs levels significantly. The findings of the empirical study indicate that inefficient management and poor and ineffective financial policies are the primary cause of high NPLs in Bangladesh.




How to Cite

Khanam, F. A., Hasan, K., & Afsar, A. N. (2021). Determinants of Non-Performing Loans of Banks in Bangladesh: An Exploratory Study. AIUB Journal of Business and Economics, 18(1), 57–74. Retrieved from