Operational efficiency of commercial banks is imperative to ensure economic stability and soundness in Bangladesh. However, it is directly affected by bank-specific factors such as bank size, capital adequacy, credit risk, liquidity, profitability and asset quality. The present study is designed to assess these bank-specific factors on the commercial banks’ operational efficiency in Bangladesh. The paper empirically analyses panel data of 30 scheduled commercial banks in Bangladesh over the period from 2011 to 2016. Several statistical techniques like Correlation Analysis, Fixed Effect Regression Model, Fixed Effect Regression Model with Cluster Robust Standard Errors and Driscoll-Kraay Standard Errors along with descriptive analysis are performed to get robust result about the study. The study reports that the bank-specific factors together explain 77.16% of the selected commercial banks’ operational efficiency. The result reveals that bank size, capital adequacy, profitability and loan portfolio have positive impact and credit risk, liquidity and asset quality have negative impact on operational efficiency of selected commercial banks in Bangladesh. The paper proposes that commercial banks should have high quality lending policy and loan portfolio after maintaining capital requirement and minimum liquidity and loan loss reserve against impaired loan to reduce insolvency risk and to sustain in the competitive business environment.
