Measuring Spread Elasticity of Demand in Commercial Banks in Bangladesh and Comparing Overall Performance with Low Income Countries

This applied microeconomics research measures elasticity of demand in a manner which specifically allows to assess overall banking performance of Bangladesh in a time series regression framework, utilizing data from 2004-2012. Besides, this study compare between Bangladesh and low income countries in terms of commercial banking performance indicators utilizing data from all low income countries in the year 2012. This paper contributes to the literature on elasticity of demand (interest rate spread), and overall performance of Bangladeshi commercial banks in novel ways. The research suggests that interest rate spread has a negative effect on clients more specifically demand is elastic. However, branches and inflation have a positive effect on clients. The effects are statistically significant. In addition, Bangladeshi commercial bank performance is relatively standard compared to other low-income countries. However, the results might contradict with others if any researcher measure absolute performance or study complete banking or financial system.