An Empirical Study of The Impact of Banking Sector Prosperity on Economy: Illustration From an Emerging One

Shoun Sarker¹

1. Department of Finance and Banking, Jatiya Kabi Kazi Nazrul Islam University, Trishal, Mymensingh, Bangladesh.

Section:Research Paper, Product Type: Journal-Paper
Vol.9 , Issue.3 , pp.27-34, Mar-2023

Online published on Mar 31, 2023

Copyright © Shoun Sarker . This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
 

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Abstract :
This paper concentrates on the dominance of prosperity of the banking sector on the economy of Bangladesh by using several econometric techniques like Ordinary Least Squares (OLS) model, Descriptive statistics and correlation analysis using annual data for the timeframe of 1995-2020. By using OLS model, this study explores irregularities in the correlation between growth of the banking sector and GDP, Balance of trade and Inflation in short run. On the contrary, this study explores positive relationship between prosperity of the banking sector and Annual development plan, Broad money, Balance of payment, Debt repayment, Exchange rate, Foreign direct investment, foreign currency reserve, Private credit, Remittance, Revenue earnings and Unemployment rate respectively. This is the first attempt to analyze the effect of profitability of banking sector on the economy of Bangladesh with varieties of variables which represents the economy and banking sector as a whole. Policy makers of Bangladesh should think when they modify the banking sector after the post-pandemic period and impose proper attention on gaining profitability in banking sector for the betterment of the economy.

Key-Words / Index Term :
Banking sector, OLS, Correlation analysis, Inflation, GDP, Remittance, Post-pandemic period

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