Attribution Non-Commercial (BY-NC)

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Attribution Non-Commercial (BY-NC)

- Regression and Correlation
- Case Study 2
- ADFB4CONTAGION
- Lecture 8 ANOVA
- Tables
- Additive models
- ANOVA 2-way
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- 2 way anova
- Cluster Analysis Project Market Research
- Solutions Chapter13
- Factorial Desing
- IMPACT OF FII FLOW ON THE BSE SENSEX AND NIFTY
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- ANOVAf03
- burgin distance vs acceleration regression
- Introdction to Statistical Modelling in R
- Notes
- Assignment 1
- A STUDY ON QUALITY OF WORK LIFE OF WORKERS IN TEXTILE PRODUCTION FIRM.

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Introduction

Banking system plays a very important role in the economic life of the nation. The health of the economy is closely related to the soundness of its banking system. In a developing country like Bangladesh the banking system as a whole play a vital role in the progress of economic development. A bank as a matter of fact is just like a heart in the economic structure and the Capital provided by it is like blood in it. As long as blood is in circulation the organs will remain sound and healthy. If the blood is not supplied to any organ then that part would become useless. So if the finance is not provided to agriculture sector or industrial sector, it will be destroyed. Loan facility provided by banks works as an incentive to the producer to increase the production. Banking is now an essential part of our economic system. Modern trade and commerce would almost be impossible without the availability of suitable banking services. First of all, banking promotes savings. All manner of people, from the ordinary laborers and workers to the rich land owners and businessmen, can keep their money safely in banks and saving centers. Secondly, banking promotes investments. Banks easily invest the money they get in industry, agriculture and trade. They either invest it directly or advance loans to other investors. Thirdly, it is most through banks that foreign trade is carried on. Whether we export or import, it is through banks that money is transferred from one country to another. For example, bills of exchange and letters of credit are the regular ways banks use to transfer money. A number of recent studies, however, indicate that the banking sector plays a more important role than it was believed earlier. Our report is focus onto some commercial banks profit function.

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the main objective of the study is: 1) To evaluate the profit functions of those selected commercial banks. 2) To determine whether or not the Net profit is affected by other factors. 3) To appraise significant factors which are affecting net profit.

Limitations

It was not possible to collect data personally by researching the whole country so we have lacking of primary data in our research report. We have to depend on secondary data source. Validity and authenticity of secondary data. Time period to make detailed analysis Number of branches, Lending interest rate & deposit interest rates are in percentile and low numerical form. So regression model will not show perfect result.

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Mercantile Bank Limited emerged as a new commercial bank to provide efficient banking services and to contribute socio-economic development of the country. The Bank commenced its operation on June 2, 1999. The Bank provides a broad range of financial services to its customers and corporate clients. The Board of Directors consists of eminent personalities from the realm of commerce and industries of the country. Vision: Would make finest corporate citizen. Mission: Will become most caring, focused for equitable growth based on diversified deployment of resources, and nevertheless would remain healthy and gainfully profitable Bank. Objectives: Strategic objectives: * To achieve positive Economic Value Added (EVA) each year. * To be market leader in product innovation. * To be one of the top three Financial Institutions in Bangladesh in terms of cost efficiency. * To be one of the top five Financial Institutions in Bangladesh in terms of market share in all significant market segments we serve. Financial objectives * To achieve 20% return on shareholders' equity or more, on average. Key People: Md. Abdul Jalil Al-Haj Akram Hussain (Humayun) A. S. M. Feroz Alam A.K.M. Shahidul Haque Chairman Vice Chairman Vice Chairman Managing Director & CEO

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The Company was incorporated on September 29, 1999 under the Companies Act 1994 as a public company limited by shares for carrying out all kinds of banking activities with Authorised Capital of Tk. 38,00,000,000 divided into 38,000,000 ordinary shares of Tk.100 each. The Company was also issued Certificate for Commencement of Business on the same day and was granted license on October 05, 1999 by Bangladesh Bank under the Banking Companies Act 1991 and started its banking operation on October 24, 1999. As envisaged in the Memorandum of Association and as licensed by Bangladesh Bank under the provisions of the Banking Companies Act 1991, the Company started its banking operation and entitled to carry out the following types of banking business: (i) All types of commercial banking activities including Money Market operations. (ii) Investment in Merchant Banking activities. (iii) Investment in Company activities. (iv) Financiers, Promoters, Capitalists etc. (v) Financial Intermediary Services. (vii) Any related Financial Services. The Company (Bank) operates through its Head Office at Dhaka and 77 branches. The Company/ Bank carries out international business through a Global Network of Foreign Correspondent Banks. Key people: Dr. Arif Dowla, Mr. Rashed Ahmed Chowdhury, Mr. Anis A. Khan, Mr. Md. Ahsan-uz Zaman, Mr. Quamrul Islam Chowdhury, Chairman Vice Chairman MD & CEO Additional Managing Director Deputy Managing Director & Company Secretary.

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National Bank Limited is one of the leading private commercial bank having a spread network of 139 branches and 15 SME/Agri Branches (total 154 service locations) across Bangladesh and plans to open few more branches to cover the important commercial areas in Dhaka, Chittagong, Sylhet and other areas in 2010. National Bank Limited has been licensed by the Government of Bangladesh as a Scheduled commercial bank in the private sector in pursuance of the policy of liberalization of banking and financial services and facilities in Bangladesh. In view of the above, the Bank within a period of 25 years of its operation achieved a remarkable success and met up capital adequacy requirement of Bangladesh Bank. National Bank Limited is a customer oriented financial institution. It remains dedicated to meet up with the ever growing expectations of the customer because at National Bank, customer is always at the center Mission: Efforts for expansion of our activities at home and abroad by adding new dimensions to our banking services are being continued unabated. Alongside, we are also putting highest priority in ensuring transparency, account ablility, improved clientele service as well as to our commitment to serve the society through which we want to get closer and closer to the people of all strata. Winning an everlasting seat in the hearts of the people as a caring companion in uplifting the national economic standard through continuous upgradation and diversification of our clientele services in line with national and international requirements is the desired goal we want to reach. Vission: Ensuring highest standard of clientele services through best application of latest information technology, making due contribution to the national economy and establishing ourselves firmly at home and abroad as a front ranking bank of the country are our cherished vision.

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Primary Source of data:

The whole study depend on secondary source of data and there is no need of primary data. Secondary Source of data: All data are collected from respective banks Annual report which are available in those banks website. Data

Liquidit Investmen y t 4145.34 4374.12 4790.16 4877.12 6948.62 7099.97 6264.71 9664.72 10937.20 24645.38

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Avg.

Avg.

Ye ar 20 07 20 08 20 09 20 10 20 11

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No. of Branche s 30 36 44 53 60

Table 2: Mutual Trust Bank Ltd. financial data from year 2007-2011

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Ye ar 20 07 20 08 20 09 20 10 20 11

2007-2011

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Ye ar 20 07 20 08 20 09 20 10 20 11

Mutual Trust Bank LTD. National Bank LTD. from year 2007-2011

*** N.B: All amounts (except No. of Branches, Avg. Lending Rate, and Avg. Deposit Rate), are in BDT million.

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Regression Equation: Whether or not the following Independent variables: 1. Deposit amount, 2. Loan amount, 3. Marketing Expense, 4. No. of branches, 5. Avg. Lending Rate, 6. Avg. Deposit Rate, 7. Managerial Expense, 8. NPL (Non performing Loan), 9. Equity Capital, 10. Liquidity, 11. Investment amount Are affected the Dependent variable- Net Profit of those above Banks we run the following regression equationY = a+ Where, + + +

Y= Depended Variable Net profit X= Independent variables And represents the coefficients of each independent variable.

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As because there are currency amount, percentage amount and as well as numerical values in independent variables data, we run multiple regressions by taking the independent variables in some segment and compare dependent variables with each segment. And test the following Hypothesis: H0 = Not affected H1 = Affected

No. of branches, Avg. Lending Rate, Avg. Deposit Rate with Net profit

With above variables data regression analysis are as followsRegression Statistics 0.997842 Multiple R 42 0.995689 R Square 49 0.982757 Adjusted R Square 96 191.7527 Standard Error 39 Observations 5 ANOVA df Regressi on Residual Total SS 8493339.0 3 87 36769.112 1 98 8530108.1 4 99 Coefficie nts Intercept No. of Branches 18468.54 38 146.1273 83 MS 283111 3 36769. 11 F 76.997 04 Significance F 0.083533775

Lower 95%

Upper 95%

848.6707469 1354.832756

0.2389 54 0.6881 88

Here, R square is 0.99 which is greater than 0.8. that means the above data show goodness of fit or 99% Variation in the Net profit can be explained by those three variables. The intercept a = 18468.5438 which mean the sum of equation will be 18468.5438 when all other variables remain constant. The p-value of No. of branches and Avg. lending rate are less than 0.5 that means those two variable are significant to the dependent variable net profit but p-value of Avg. Deposit rate is greater than 0.05, that means it is not significant with Net Profit. At 0.05 level of significance with degree of freedom (3,1) is 4.15 which is less than F test statistics 76.99. So Null hypothesis is rejected and alternate hypothesis is accepted. We can say that those variables are affected Net profit. Deposit amount, Loan amount, Equity Capital with Net profit

With above variables data regression analysis are as followsRegression Statistics Multiple R 0.99 R Square 0.99 Adjusted R Square 0.999 Standard Error 26.092 Observations 5 ANOVA df Regressi on Residual Total 3 1 4 SS 852941 2 680.81 62 853009 3 Coefficie nts Intercept -81.4805 MS 284313 7 680.81 62 F 4176.0 72 Significance F 0.011375

t Stat -0.6710

Pvalue 0.623 73

Here, R square is 0.99 which is greater than 0.8. that means the above data show goodness of fit or 99% Variation in the Net profit can be explained by those three variables. The intercept a = -81.4805, which mean the sum of equation will be -81.4805 when all other variables remain constant. The p-value of Deposit amount, loan Amount and equity capital are less than 0.5 that means those three variables are significant to the dependent variable net profit. At 0.05 level of significance with degree of freedom (3,1) is 4.15 which is less than F test statistics 4176.072. So Null hypothesis is rejected and alternate hypothesis is accepted. We can say that those variables are affected Net profit. Liquidity, Investment, NPL with Net Profit

With above variables data regression analysis are as followsRegression Statistics 0.9562 Multiple R 57 0.9144 R Square 27 0.6577 Adjusted R Square 06 854.37 Standard Error 09 Observations 5 ANOVA df Regressi on Residual Total 3 1 4 SS 780014 3 729949 .6 853009 3 MS 260004 8 729949 .6 F 3.5619 55 Significance F 0.367078

t Stat 0.4277 1

P-value 0.7427

Here, R square is 0.91 which is greater than 0.8. that means the above data show goodness of fit or 91% Variation in the Net profit can be explained by those three variables. The intercept a = -2627.46, which mean the sum of equation will be -2627.46 when all other variables remain constant. The p-value of Liquidity, Investment, NPL are greater than 0.5 that means those three variables are not significant to the dependent variable net profit. At 0.05 level of significance, with degree of freedom (3,1) is 4.15 which is greater than F test statistics 3.56. So Null hypothesis is accepted or fail to reject. We can say that those variables are not affected Net profit.

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With above variables data regression analysis are as follows-

Regression Statistics 0.9852 Multiple R 17 0.9706 R Square 52 Adjusted R 0.9413 Square 04 353.79 Standard Error 44 Observations 5 ANOVA df Regressi on Residual Total 2 2 4 SS 827975 2 250340 .9 853009 3 Coefficie nts Intercept Marketing Expense Managerial Expense -2577.8 11.97486 435.0146 MS 413987 6 125170 .5 F 33.07 39 Significance F 0.029348

Here, R square is 0.97 which is greater than 0.8. that means the above data show goodness of fit or 97% Variation in the Net profit can be explained by those three variables. The intercept a = --2577.8, which mean the sum of equation will be -2577.8 when all other variables remain constant. The p-value of Marketing Expenses is greater than 0.5 that means this variable is not significant to the dependent variable net profit. At 0.05 level of significance with degree of freedom (2,2) is 5.86 which is less than F test statistics 33.0739. So Null hypothesis is rejected and alternate hypothesis is accepted. We can say that those variables are affected Net profit.

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Conclusion

By testing all variables with respect to dependent variable Net Profit, we find that In 3 segments which are include independent variables- No. of Branches, Avg. Lending Rate, Avg. Deposit Rate, Loan Amount, Deposit amount, Equity Capital, Marketing Expense, Managerial Expense the null hypothesis is rejected. So that can conclude that those variables are effected Net profit of those selective Banks as per as the Data. In one Segment which include independent variables Liquidity, Investment and Non Performing Loans the null hypothesis is accepted or fail to reject. So in that case we can conclude that those variables are not affected those selective Banks Net Profit according to those data.

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References

[1]. www.nbl-bd.com [2]. www.mtbl-bd.com [3]. www.mercantilebank-bd.com [4]. www.bangladeshbank.org.bd [6]. www.wikipedia.com [7]. www.scribd.com

[8]. www.economicreview.com

[9] Douglas, Linch, Statistical technique for Business & Economics, 14th edition by Tata-McGraw Hill Publications, 2010

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