Financial Strength Analysis of Banking Sector of Bangladesh : AComparative Study of Islamic Banks

Abstract

This study aims to analysis the financial strength of scheduled Islamic banks in Bangladesh, with a focus on a comprehensive financial analysis. The research is descriptive in nature and adopts an inductive approach using cross-sectional data to calculate, identify, and assess the financial stability of Islamic banks in the country. Financial performance is examined across several key indicators, including capital adequacy ratio, profitability ratios, market ratios, and value-added metrics, to evaluate internal, market-based, and economic performance. The analysis ranks banks based on their financial results from 2021 to 2023, with Islami bank Bangladesh limited emerging as one of the leading institutions. The study highlights that one banks exhibit weak economic efficiency, negative economic value added (EVA), and undervalued market share prices. The research primarily covers four Islamic banking institutions in Bangladesh, which raises questions regarding the generalization of the findings. Given that many corporate entities also utilize financial strength analysis, the study's results offer valuable insights for bank management and potential investors. Furthermore, the findings can serve as a useful resource for policymakers in Bangladesh, providing guidance on the overall health and stability of the Islamic banking sector. Keywords: Analysis of Financial strength; Banking Sector; Cross-Sectional Data Financial Analysis; Economic Added Value; listed islamic Bank between 2021 and 2023