BANGLADESH INSTITUTE OF BANK MANAGEMENT

Dissertation Paper
On
“The Impact of Liquidity on Profitability
of Selected Banks in Bangladesh”
Submitted To

Professor Dr. Prashanta Kumar BanerjeeTanweer Mehdee

Assistant Professor
Bangladesh Institute of Bank Management
Mirpur-2, Dhaka.

Submitted By:
-------------------------
MBM (Evening) 3rd Batch
Roll No. ----------------

Date of Submission: January17th January, 2019

 Letter of Transmittal
January, 2019

To
Professor Dr. Prashanta Kumar Banerjee
Bangladesh Institute of Bank Management
Mirpur-2, Dhaka.

Subject: Submission of the dissertation paper on “Effect of Share Price due to Fluctuation
of Profitability of Rupali Bank Limited”.

Dear Sir,
With due respect, I am submitting herewith my dissertation paper on the above-mentioned
title for the partial fulfillment of the requirements of 6th Term, MBM Program.
I have toiled hard in preparing this dissertation and tried to make the report clear and
comprehensive within the constraints. I sincerely believe that it will serve the required
purposes. I shall always be obliged to furnish any clarification regarding this dissertation, if
required.

Sincerely Yours,

--------------------------
Mikeal Kumer
MBM (Evening) 3rd Batch
Roll No. 1031613
May 22nd 20 14

Professor Dr. Prashanta Kumar Banerjee

Bangladesh Institute of Bank Management
Mirpur-2, Dhaka.

Subject: Submission of thesis report on "The Impact of Liquidity on Profitability of Selected

Banks in Bangladesh"

This is a great pleasure for me to .submit ray internship report on The 'Impact of Liquidity on
Profitability of Selected Banks in Bangladesh" as a requirement: for my graduation. I have
prepared Ms report during ray three months long Internship program at Mercantile Bank
Limited, Khiatungonj Branch Chittagong. I was private to be associated to be with such an
experienced efficient and helpful team in such a reputed Baric. His has been a great souse of
teaming for UK and helped me a tot to achieve practical knowledge.

I have put my best in making this report and tried to make this report information practical
and relevant. I hope and believe this report will satisfy your requirements and expectations.

However. I would like to express my sincere gratitude to you for your kind dui
dance, and cooperation in preparing this report which will definitely help me in future
endeavors. It would be my immense pleasure if you find this report informative.

I shall be happy to provide any further query and classification regarding this report.

Yours Sincerely

-------------------------
MBM (Evening) 3rd Batch
Roll No. ----------------
 Acknowledgement
Fist of alt 1 am grateful to Almighty ALLAH

I would like to thank all my honorable faculty members, who over the years, played a big role
in grooming me into whatever I am today, especial my honorable supervisor. Professor Dr.
Prashanta Kumar Banerjee, Bangladesh Institute of Bank Management for being so
kind, cooperative, and supportive the entire time. I an grateful to them for their valuable
suggestions and time that they have spent on me. The past few months- have been a
wonderful experience for me full of challenges and satisfaction. This has obviously been a
great source of learning for me and a transition period from a student life to professional life.

I would like to acknowledge my great appreciation towards everyone at Mercantile Bank

Limited far being so warm in their approach and for bestowing such responsibility on me all
the white, making me feel completely at ease. A special thanks, to nay External Internship
Supervisor. Mr. Jashim Uddin V.P.. Head of Khatungonj Branch Mercantile Bank Limited for
giving me time and for providing me with all kinds of support by suggest mg me about
completing report.

Finally, I would like to thank my friend Mushtari Manzoor who helped me in conducting my
research by taking out time for me to discuss on various issues and making me more
knowledgeable about the, Banking industry. Without her I would not have been able to
complete my report.
 Executive Summary

Profitability and liquidity are the most primmer issues in the banking sector all over the

world. The unlimited goal for any organization is to maximum profitability. However, in case

of banks too much attention on profitability may lead the bank into a pitfall by diluting the

liquidity position. It is very much important to maintain an optimum level of liquidity while

generating good amount of profit. This study is initiated to find out the relationship between

liquidity and profitability. The study five scheduled private commercial banks in Bangladesh

over a period of past 5 years from 2013 to 2017. To examine the impact of liquidity on

profitability, descriptive statistics and correlation analysis has been executed. profitability

ratios, ROA and ROE are assumed to be the dependent variable and the independent variables

are liquidity measure i.e. Loan Deposit Ratio, Deposit and Cash Deposit ratio. However, the

descriptive analysis has revisable that the values of standard deviation and variance of

profitability ratio are higher than those of the liquidity measures. Therefore, profitability is

more that liquidity measures. The Pearson’s correlation analysis and findings suggest that

there is no significant relationship. The regression analysis also shown that there is no

significant impact of liquidity measures on profitability.

 Table of Contents

Chapter Particular Page No

Executive Summary
Chapter-1 Introduction 1-4
1.1 Introduction. 1
1.2 Statement of the Problem 2
1.3 Purpose of the Study 3
1.4 Scope of the Study 3
1.5 Methodology of the Research 3
1.5.1 Research design 3
1.5.2 Research instrument 4
Chapter-2 Banking Systems of Bangladesh 5-
2.1 Banking Sector of Bangladesh
2.1.1 Banking System in Bangladesh
2.1.2 Private Commercial Bank
2.1.3 The Current Banking System Structure
2.2 Banking System Structure