Impact of monetary policy on financial performance of banks in Bangladesh

This study examines the impact of monetary policy on the financial performance of listed private commercial banks in Bangladesh. Using panel data from 19 banks over 2013–2021, it investigates the effects of the Cash Reserve Ratio (CRR), Money Supply Growth (MSG), and Treasury Bill Rate (TBR) on Return on Total Assets (ROTA), Return on Capital Employed (ROCE), and the Log of Operating Profitability (LOOP). Panel regression models with robustness checks are employed. The results show that CRR improves ROTA but reduces ROCE, indicating a trade-off between liquidity requirements and capital efficiency. MSG positively affects ROCE, whereas both MSG and TBR significantly reduce operating profitability. These findings provide new evidence on the relationship between monetary policy and bank performance in Bangladesh and offer policy implications for designing balanced monetary strategies that support both banking sector profitability and financial stability.