Effect of Social Capital on Bank’s Financial Performance: Does Competitive Advantage Have the Mediating Role?

The study sought to explore the effect of Social Capital (SC) on banks’ financial performance and whether this effect is mediated by competitive advantage (CA) or not. Secondary data were collected from banks’ nine years’ annual reports (۲۰۱۴-۲۰۲۲). By stratified sampling method, ۲۰ commercial banks in Bangladesh were selected. Findings revealed that the influence of SC on ROA and NIAT is significant and CA mediates between them. For one unit increase in SC, ROA and NIAT will increase by ۰.۲۷۴ and ۰.۵۰۸ units respectively. However, there is no significant effect of SC on ROI. SC has a significant impact on CA also. One unit increase in SC results in a ۰.۸۲۲ unit increase in CA and vice versa. The findings of the study will have implications for policymakers like Bangladesh Bank, government, bankers, depositors, borrowers, and other stakeholders as enrichment of social capital is likely to improve banks’ financial performance through the attainment of CA.

Keywords:

Competitive advantage , financial performance , Social Capital