Non-Performing Loans (NPLs) in Islamic Banks of Bangladesh: An Empirical Study

Benazir Rahman and Nusrat Jahan

The word banking is a buzz word in this modern era. Our financial system largely depends on this sector. The concept of Non-Performing Loans (NPLs) or classified loans is one of the major barriers in the way of sustainability and growth of banking industry. The study basically focuses on the recent scenario of Non-Performing Investments (NPIs) in Islamic commercial banks of our country. The paper has shown the impact of credit worthiness of customers, bureaucratic issues, ethical perspective of employees, credit analysis process and so on over the trend of NPLs or NPIs. For the study a field survey has done for primary data collection. All of the 8 Islamic banks are in the sample frame. Principal Component Analysis has been used to analyze primary data. The regression and trend between NPIs and profit after tax has shown to reveal the real picture. 5 years secondary data has been used (2011- 2015). Different statistical tools like as mean values, standard deviation, F-test, regression analysis and so on have been used. The paper reveals some variables have highest influence over the NPIs of Islamic banks while others have least impact. The paper will be useful material for the finance scholars and bankers.