(Thakor, reduce the state ownership of banks in

1998) Berger et al. (2006), found a
strong favorable efficiency effects from reforms that reduce the state
ownership of banks in China and increase the role of foreign ownership. The Big
Four National Banks4 are by far the least profit efficient,
apparently due in large part to poor revenue performance and high
nonperforming loans. The majority foreign-owned banks are also relatively
efficient. The
results of the study conducted by Mihir et al. (2009) showed that foreign banks
were slightly
more efficient than the local public and private banks, and that there was not
much of a difference
in the efficiency of public and private banks. Net worth was found to be
under-productive for efficient private and foreign banks, while it
was properly utilized by public banks. Thus, profitability
of private and foreign banks is expected to be lower than that of public banks,
especially in terms of return on net worth. Operating expenses
were found to be very under-productive for efficient private
and foreign banks.


and Inanoglu (2004) estimated the comparative
cost efficiency of Turkish banks for the period 1990-2000 using the data
envelopment analysis (DEA) method. They found that Islamic banks were more
efficient due to their asset-based financing.

(2004) compared the performance of Islamic banks and conventional commercial
banks of Bahrain with respect to (a) profitability, (b) liquidity,
and (c) capital management. A comparison of eleven financial ratios
for the period 1991-2001 found no difference in profitability and liquidity
performance between Islamic and conventional banks for that period.

and Majid (2006) investigated the comparative efficiency of foreign and
domestic banks of Malaysia during 2001-2005. They found that
banks’ scale inefficiency dominated pure technical efficiency during
period. They also found that the foreign banks had higher technical efficiency
than the domestic banks.



An observation of Chowdhury (2002)
was that the banking industry of Bangladesh is a combination of nationalized,
private and foreign banks. Many efforts have been made to explain the
performance and efficiency of these banks. For understanding the performance of
the bank requires knowledge about the profitability and relationship between
variables like, market size, bank’s risk and bank’s market size with the


In a study on Malaysian commercial
banks Mohd. Zaini Abdul Karim (2003) found that ICT has significantly increases
the cost efficiency after the legged period of one year. Some other studies on
banking market structure of Malaysia, such as Rostia Suhaimi(2006), Abdul
Ghafar Ismail (2002), found that Malaysia’s banking industry has an imperfect


Van Horne & Wachowicz (2005)
stated that for evaluating a firm’s financial condition and performance a
financial analyst need to perform “checkups” on various aspects of a firm’s
financial health. A tool frequently used these checkup is financial ratio.


Pandey (2006) stated that the
easiest way to evaluate the performance and efficiency of a firm is to compare
its present ratio with the past ratio. It gives an indicator of the direction
of change and reflects whether the firm’s financial performance has improved,
deteriorated or remained constant over time.


Small and medium sized banks from
the early 1970’s until the early 1980’s deregulation occurred were examined by
Wall (1985). He found that profitable banks have lower interest rate and their
non-interest expenses are lower than the less profitable banks. In addition the
more profitable banks have had lower cost of funds, greater use of transaction
deposits, more marketable securities and higher capital.


Gup and Walter (1989) got the
consistently profitable small banks operates basic banking with low cast funds
and high quality investment. The study took under consideration the banks from
1982 to 1987 during the deregulations. During this period there were
considerable differences between regions due to declining energy, real estate
and commodity prices. During this period high quality loan was made by high
performance banks. And these banks held proportionately more capital, invested
more in more securities and relied on lower cost funding sources compared with
the average small bank.


Chowdhury and Islam (2007) pointed
the sensitivity to the interest changes. They narrated that the deposit and
loan advances of nationalized commercial banks (NCBs) are less sensitive to the
interest changes than those of specialized banks (SBs). So, SBs should not make
abrupt change in lending or deposit by following by NCBs. If NCBs changes their
lending rate their deposit or loan and advances will be affected less than
those of SBs.  Moreover, deposits of NCBs
have higher volume and higher volatility than those of SBs. However SBs offer
higher deposit rates and charges higher lending rate than NCBs, which is why
the interest rate spread of SBs was higher than that of NCBs.


Khan (2008) narrated that bank is
evaluated based on profit and loss as the same way for other business. If the
shareholders of the bank more profit than the bank is identified more
successful. Banks can attain success if relevant risks are effectively


& Younus (2009) stated that the higher the higher and non interest income
as a ratio of total assets of banks, the lower the interest rate spread.
Similarly market share of a deposit of a bank, statutory reserve requirement
and NSD certificate interest affects the IRD. The analysis In terms of banks
Group Shows that IRS significantly influenced by operating cost and clasifed
loan of stated owned commercial bank and specialized banks while inflation,
operating cost market share of deposit, statutory reserve requirement and taxes
are important for the private commercial banks. On the other hand non interest
income, inflation, market share and taxes matter for the foreign commercial