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The Economics and Finance Letters

December 2020, Volume 7, 2, pp 189-199

Determinants of Firm Profitability: Evidences from Bangladeshi Manufacturing Industry

Mohammad Sahabuddin


Sabreena Khan Synthia

Mohammad Sahabuddin 1

Sabreena Khan Synthia 2

  1. Lecturer Canadian University of Bangladesh, Bangladesh. 1

  2. Student University of Dhaka, Bangladesh. 2

Pages: 189-199

DOI: 10.18488/journal.29.2020.72.189.199

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Article History:

Received: 15 July, 2020
Revised: 24 August, 2020
Accepted: 10 September, 2020
Published: 28 September, 2020


This study aims to investigate the factors which have impact on profitability of the manufacturing firms of Bangladesh. The determinants are divided into three categories i.e. firm-specific, industry-specific and macroeconomic factors and the profitability of the firms is defined with return on assets (ROA). To investigate this relationship, the study has taken into consideration of 508 sample observations from 113 Bangladeshi listed manufacturing firms covering the year from 2014 to 2018. The model this study used, includes the dynamic aspect of profitability and thus a dynamic panel estimator i.e. the General Method of Moments (G.M.M.) was applied. The result of this study shows that firm-specific factors (age, labor cost), industry-specific factor (concentration) and macroeconomic factors (G.D.P. growth rate, inflation) have significant influence on manufacturing firm’s profitability.
Contribution/ Originality
This study examined the Panel data by using General Method of Moments (G.M.M.) to investigate the determinants of profitability which contributes to the existing literature in manufacturing industry of Bangladesh by introducing variables from three different categories; firm-specific, industry-specific and especially macroeconomic factors for the very first time.


Profitability, Manufacturing industry, Panel data, G.M.M, Inflation rate, Bangladesh economy.


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This study received no specific financial support.

Competing Interests:

The authors declare that they have no competing interests.


Both authors contributed equally to the conception and design of the study.

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