The Jahangirnagar Economic Review ISSN 1990-2492 Vol. 32, June 2021 The Impact of Banking on Economic Growth in Bangladesh: An Empirical study Md. Nabir Hossain 1 Kawsar Hosan 2 Md. Saiful Arefin 3 Abstract: The banking sector is crucial to any country's economic progress since it provides capital formation and funding for economic activities. Using yearly data from 2000 to 2021, this paper evaluates the effect of the banking industry of Bangladesh's economic growth. The study examines the data using variables of banking indicators such as bank domestic lending to the private sector, liquidity reserve to bank asset ratio, gross domestic savings, interest rate spread, and deposit interest rate. When utilizing the ordinary least square regression (OLS) approach, some banking variables, such as gross domestic savings and domestic loans to the private sector, have a significant influence on economic growth. Deposit interest rates have a positive but insignificant impact on economic growth. The impact of bank liquidity reserves and interest rate spreads on economic development has a negative but significant effect on economic growth. Keywords: Bank Impact, Economic Growth, Banking Sector, Ordinary least square regression (OLS) method. JEL Classification: C32, E22, G21 1.0 Introduction Economic growth is thought to be one of the new world order's key goals. The South Asian emerging country with the fastest rate of growth is Bangladesh. Bangladesh's economy has expanded by more than 6% yearly during the last three decades. The corona virus epidemic's detrimental effects on Bangladesh's economy have been mitigated. Prior to the pandemic, the GDP grew by 7.88 percent in FY 2018-19 and 3.45 percent in FY 2019-20. GDP growth has gotten back to 6.94% in the 2020-21 fiscal years. BBS preliminary forecasts predict that the GDP will expand by 7.25 percent in FY 2021-22 (Source: Bangladesh Economic Review-2022). It has been controversial whether economic growth and banking sector development are causally related. The main point of contention is whether economic growth precedes financial development or vice versa. Financial institutions, on the other hand, use the economy's additional financial resources to transform investment and output, the two primary necessities of development. Bangladesh is trying to increase its national income as a developing nation in order to generate more employment and keep up economic growth. The banking sector is thought 1 Assistant Director, Research Department, Bangladesh Bank. email: nabir.hossain@bb.org.bd. 2 Lecturer, Department of Economics, Jahangirnagar University. email: kawsar.sojib@juniv.edu 3 Assistant Director, Research Department, Bangladesh Bank. email: saiful.arefin@bb.org.bd. Feedbacks are welcome (saiful.arefin@bb.org.bd). The viewpoints expressed in the study are the authors' own and do not represent the views of Bangladesh Bank or Jahangirnagar University.