Impact of COVID-19 on the Performance of Commercial Banks of Bangladesh: A Comparative Analysis of Pre-COVID, COVID Period and the Determinants for Post-COVID Performance

This study, comprising two studies, investigates the performance of commercial banks in the pre-COVID and COVID periods and the determinants of post-COVID performance.The empirical investigation of system GMM of study one from 2014 to 2021 points to a few significant insights.Commercial banks' risk increased substantially in the COVID period compared to the pre-COVID period, whereas stability addressed through the Z-score depicts the reverse risk results.That means that the stability of the pre-COVID period was superior to that of commercial banks during the COVID period.It refers to the performance of banks from a risk-stability perspective becoming worse in the COVID period than in the pre-COVID period.Banks' profitability also reduced in the COVID period compared to the pre-COVID period of commercial banks.Return on assets (ROA) and Pre-tax profit significantly reduced in the COVID period compared to pre-COVID counterparts.However, we did not find any significant impact of the COVID period on banks' return on equity (ROE).Surprisingly, the efficiency of commercial banks was enhanced in the COVID period compared to pre-COVID periods in the Bangladeshi banking industry.Both revenue and human capital efficiency increased in the COVID period rather than in the immediate pre-COVID period in Bangladesh.Therefore, it is apparent that in the COVID period, banks' risk and profitability deteriorated, whereas the efficiency of banks was enhanced.Study two delves into the determinants that significantly impact the post-COVID performance of commercial banks.The study pinpoints liquidity, bank size, operating efficiency, assets quality, and corporate governance as bank-specific factors, as well as inflation and exchange rate as macroeconomic factors that significantly impact the post-COVID performance of commercial banks in Bangladesh.However, we found no significant impact of industry-specific variables in post-COVID performance.