ISSN : 1997-1052 (Print)
227-202X (Online)
 
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Role of Commercial Bank in the Economic Development of Bangladesh
Fatema Tuz Zohra
Abstract

Banks have always played an important role in the country’s economy. They play a decisive role in the development of the industry and trade. They are acting not only as the custodian of the wealth of the country but also as resources of the country, which are necessary for the economic development of a nation. The general role of commercial banks is to provide financial services to general public and business, ensuring economic and social stability and sustainable growth of the economy. Using yearly data on GDP as well as various commercial banks development indicators, covering the period July 2008 to July 2018, the study employed the Auto-Regression methodology in determining existence of the short-run and long-run relationships. Research is based upon the secondary data, which provide the findings on 10 commercial banks and how it is helpful in economic development of Bangladesh. This study used four explanatory variables to measure banking sector growth such as; banking credits facilities, customer deposits, number of branches, and interest rate on credits. It also used gross domestic product to measure economic growth in Bangladesh. The main objective of the study is to critically examine and analyze the role of commercial banks on the economic growth of Bangladesh. The study portrays how loans and credit affect the GDP and consequently the level of economic growth of Bangladesh. The study thus concluded that commercial banks' development indicators have an impact on economic growth in Bangladesh and recommend reforms in the banking industry to ensure increased lending to support the economy.

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