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DIU-JOURNAL OF BUSINESS AND ENTREPRENEURSHIP

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Paper Title
Impact on Economic Value Added on Financial Performance: A Study on Selected Private Commercial Banks in Bangladesh

Authors

Roy, Jewel Kumar; Emran, Fahmida

Abstract

The performance of the company is required to be assessed, evaluated and observed to gain information about what needs to be done in order to develop further. As one of the most crucial business segment in the economy, banks, and their performances are considered to be taken into further study. This study attempts to classify how good the banks sampled performance. Then, by measuring its performance through ratio analysis in the form of return on assets, net interest margin, return on equity, capital adequacy ratio, non-performing loan, loan-to-deposit ratio, and a market measure in form of economic value added, this study expects to observe the influences of those measurements toward banks’ performances in terms of total assets, total debts, and interest expense. This research uses historical data on financial reports of the banks that compiled over a period of 8 years (2008-2015).Authors observed that value added is created when a company’s project yields profit, as reflected in a positive influence on PER. They also found that there are causal relationships and the respective contribution and magnitude of each variable that affects performance. Authors suggested that each variable comprising, assets, earnings, capital, liquidity and sensitivity may be analysed separately in order to gain an understanding of how each respective variable actually contributes to performance.

Keywords

economic value added, performance, ratio analysis

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