Profitability, marketability, and CSR disclosure efficiency of the banking industry in Bangladesh

Mohammad Nur Uddin; Md Harun Ur Rashid; Md Tahidur Rahman

doi:10.1016/j.heliyon.2022.e11904

Profitability, marketability, and CSR disclosure efficiency of the banking industry in Bangladesh

Heliyon. 2022 Nov 26;8(11):e11904. doi: 10.1016/j.heliyon.2022.e11904. eCollection 2022 Nov.

Authors

Mohammad Nur Uddin¹, Md Harun Ur Rashid¹, Md Tahidur Rahman²

Affiliations

¹ Department of Economics & Banking, International Islamic University Chittagong (IIUC), Kumira, Sitakunda, Chattogram, 4318, Bangladesh.
² Department of Business Administration, Bangladesh Army International University of Science and Technology, Cumilla 3501, Bangladesh.

Abstract

Using the Data Envelopment Analysis (DEA) approach, this study measures the profitability, marketability, and corporate social responsibility (CSR) disclosure efficiencies from 2012 to 2021 of listed banks in Bangladesh. The results show that Bangladeshi banks are, on average, inefficient in terms of all efficiencies, profitability (0.703), marketability (0.56), and CSR disclosure (CSRD) (0.903) over the sample period. Further, the study compared the three efficiencies between Islamic and conventional banks and found that conventional banks are more efficient than Islamic banks in terms of profitability and marketability at 5% and 8%, respectively, while, in terms of CSRD efficiency, Islamic banks are by 1% more efficient than conventional banks. Furthermore, ordinary least square (OLS) regression has been used to investigate the impact of financial constraints, political connections, and Shari'ah regulations on firm efficiencies. The results showed that financial constraints negatively impact the firms' all three efficiencies, while political connections and Shari'ah regulations negatively affect the banks' marketability efficiency. The findings advocate more compliance with corporate regulation and considerable contributions to CSR, leading to increased stakeholder loyalty and improved efficiency of banks. The findings provide insight for the banks' management to improve their efficiency level, investors and depositors to make proper judgments about their investment, and clients to compare among banks for better decision making. In addition, academicians and researchers have necessary insight from the DEA's noble use in Bangladesh's banking sector.

Keywords: Bangladesh; Banks’ efficiency; DEA; Financial constraints; Islamic banks; Political connections.