Title:
STEERING THROUGH THE STORM: AN EMPIRICAL ANALYSIS OF COVID-19’S IMPACT ON BANK EFFICIENCY IN BANGLADESH

Authors:
Md. Khaled Iqbal, Shahana Kabir and Niger Sultana

Abstract:
The study evaluates the efficiency levels of Bangladeshi banks spanning 2014 to 2021, with a particular emphasis on 2020 and 2021, when the COVID-19 pandemic caused unexpected global disruption and economic devastation. Utilizing Data Envelopment Analysis (DEA), the study first measures the efficiency of 25 commercial banks in Bangladesh over the specified period. The overall bank efficiency levels in Bangladesh declined substantially during the COVID-19 pandemic compared to the pre-pandemic period. This finding of study has corroborated by paired t-tests and Wilcoxon Signed-rank tests. The study also reveals that both conventional PCBs and Islami PCBs were severely impacted in the initial phase of the pandemic in 2020, but most demonstrated remarkable recovery by 2021. In contrast, SCBs exhibited resilience throughout the pandemic period, with the exception of two banks. The study used Tobit regression model to identify key bank-specific and macroeconomic factors influencing bank efficiency. The regression results indicate that bank size, ROA and diversification have a significant positive influence on bank efficiency levels whereas credit risk, overhead expenses and asset quality have a significant negative effect, as expected. In case of macroeconomic factors, GDP growth contributes positively to bank efficiency levels, while the influence of real interest rate is found to be insignificant. The primary objective of this study is to determine whether the Covid-19 have significant impact on bank efficiency and the findings from the study confirm that COVID-19 had a significant adverse impact on the bank efficiency levels. Academics and policy-makers will also benefit from the results of the study. Certainly, the present study can be extended in many aspects in the future research to come in terms of data variety, including more commercial banks or the choice of performance metrics such as economic efficiency (Cost, revenue and profit) and Malmquist Total Factor Productivity Index (TFP).

Keywords:
Bangladeshi banks, bank efficiency, COVID-19, DEA, Tobit regression model

DOI:
https://doi.org/10.37500/IJESSR.2025.8609

Date of Publication: 03-12-2025