INTEREST SPREAD ON THE PROFITABILITY OF ISLAMIC BANKS AND CONVENTIONAL BANKS

This study was conducted based on secondary data during 2011 to 2015 to analyzed and investigated the market interest rate effect on the bank’s profitability in Islamic and Conventional Banks in Bangladesh. This study tried to trace out which sector is more responsive to the change in market interest spreads both banking sectors keep a deep view on interest spread fluctuations when they imply their policy. The prime concern of this study was to analyze five years interest spread with profitability ratio (i.e., ROA, ROE and NPM) of both banking sectors. Moreover, the regression analysis model was used to observe the effects of interest spread on profitability. The results show that the interest spread has significant effect on both ROA and ROE of Islamic banks and conventional banks.