Financial Institutions in Bangladesh: Assessing Performance, Risk, and Sectoral Contributions in 2023

Abstract

Financial institutions (FIs) are vital to the economic fabric of Bangladesh, offering a range of services that support the production sector, employment generation, and overall economic growth. This study provides a comprehensive assessment of the performance, risk management practices, and sectoral contributions of FIs in Bangladesh as of end-December 2023. Utilizing data from 35 FIs, including fully government-owned, privately-owned, and jointly established institutions, the research evaluates their financial health through tools like stress testing and the CAMELS rating system. The analysis covers sources of funds, asset composition, liability-asset ratios, asset quality, profitability, capital adequacy, and liquidity. Additionally, the study examines the sector-wise concentration of loans and leases, highlighting the predominant allocation to the industry sector. The findings underscore the pivotal role of FIs in driving economic activities and provide insights into their risk profiles and performance metrics, essential for stakeholders and policymakers aiming to enhance financial stability and economic development in Bangladesh