The consequence of the credit risk on the financial performance in light of COVID-19: Evidence from Islamic versus conventional banks across MEA region

Ahmed, Hussien Mohsen; El-Halaby, Sherif Ismail; Soliman, Hebatallah Ahmed

doi:10.1186/s43093-022-00122-y

Future Business Journal

Table 9 Impact of NPLs on FP for convectional banks as well as Islamic banks after moderating the COVID-19

From: The consequence of the credit risk on the financial performance in light of COVID-19: Evidence from Islamic versus conventional banks across MEA region

Model	Model 5						Model 6
	Impact of NPL on ROA by moderating the COVID-19 for CBs Fixed effect			Impact of NPL on ROA by moderating the COVID-19 for CBs Random effect			Impact of NPL on ROE by moderating the COVID-19 for IBs Fixed effect			Impact of NPL on ROE by moderating the COVID-19 for IBs Random effect
	Coefficients	T	Sig	Coefficients	T	Sig	Coefficients	T	Sig	Coefficients	T	Sig
Constant	− 1.767	− 3.070	0.002**	− 1.173	− 2.619	0.009**	− 2.759	− 0.633	0.526	− 0.271	− 0.078	0.937
G.NPL %	− 0.0101	− 1.239	0.215	− 0.021	− 3.256	0.001**	− 0.089	− 1.458	0.145	− 0.168	− 3.310	0.001**
SIZ	0.155	3.153	0.002**	0.072	1.880	0.061*	0.763	2.047	0.041**	0.422	1.432	0.152
LD %	− 0.0003	− 4.689	0.000***	− 0.0004	− 7.134	0.000***	− 0.002	− 3.831	0.000***	− 0.002	− 5.572	0.000***
EA %	0.0419	2.916	0.004**	0.034	2.8615	0.004**	− 0.196	− 1.809	0.071*	− 0.251	− 2.715	0.007**
CA %	0.0779	6.018	0.000***	0.093	8.934	0.000***	0.477	4.870	0.000***	0.558	6.988	0.000***
LLR %	− 0.002	− 2.555	0.011**	− 0.0025	− 3.409	0.001**	− 0.013	− 1.965	0.050**	− 0.011	− 2.045	0.041**
LA %	− 0.002	− 0.570	0.569	0.0030	1.060	0.289	0.021	0.754	0.451	0.052	2.388	0.017**
INF	0.0118	1.762	0.079*	0.0128	2.3657	0.018**	0.035	0.697	0.485	0.058	1.409	0.159
UNE	0.043	3.556	0.000***	0.027	2.9036	0.004**	0.349	3.782	0.000***	0.220	3.066	0.002**
TC	− 1.92E − 06	− 6.32	0.000***	− 2.08E − 06	− 7.5214	0.000***	− 1.41E − 05	− 6.135	0.000***	− 1.62E − 05	− 7.672	0.000***
TD	5.19E − 05	4.199	0.000***	5.95E − 05	5.382	0.000***	0.0004	4.170	0.000***	0.0005	5.698	0.000***
Model summary	Adjusted R Square	0.557		Adjusted R Square	0.307		Adjusted R Square	0.508		Adjusted R Square	0.217
	F	5.156		F	24.210		F	4.405		F	15.536
	Sig	0.000		Sig	0.000		Sig	0.000		Sig	0.000
Hausman test	Chi sq. 44.539	Prob	0.000				Chi sq. 34.759	Prob	0.000

Model	Model 5						Model 6
	Impact of NPL on ROA by moderating the COVID-19 for IBs Fixed effect			Impact of NPL on ROA by moderating the COVID-19 for IBs Random effect			Impact of NPL on ROE by moderating the COVID-19 for IBs Fixed effect			Impact of NPL on ROE by moderating the COVID-19 for IBs Random effect
	Coefficients	T	Sig	Coefficients	T	Sig	Coefficients	T	Sig	Coefficients	T	Sig
Constant	− 1.89	− 1.374	.174	− 0.166	− 0.162	.871	− 10.86	− 1.194	.237	5.552	0.787	.433
G.NPL %	− .137	− 5.236	.000***	− .154	− 7.297	.000***	− .435	− 2.509	.015**	− .628	− 4.342	.000***
SIZ	0.525	4.836	.000***	0.377	4.696	.000***	4.349	6.059	.000***	3.006	5.406	.000***
LD %	− .008	− 1.386	.171	− .008	− 2.022	.046**	− .136	− 3.731	.000***	− .121	− 4.267	.000***
EA %	− 0.040	− 0.805	.424	− .026	− 0.886	.377	− 0.513	− 1.549	.127	− .397	− 1.921	.058*
CA %	.066	1.842	.070*	0.031	1.269	.208	.419	1.769	.082*	0.038	0.225	.822
LLR %	− 0.0005	− .481	.632	− 0.002	− 2.129	.036**	.015	2.092	.041**	.003	0.451	.653
LA %	− 0.041	− 3.580	.000***	− 0.031	− 3.572	.000***	− .391	− 5.097	.000***	− .290	− 4.836	.000***
INF	.064	2.179	.033**	0.051	2.107	.038**	.817	4.197	.000***	.770	4.646	.000***
UNE	− 0.053	− 1.908	.061*	− 0.020	− 1.048	.297	− 0.002	− 0.009	.992	.062	0.463	.645
TC	− 1.28E − 06	− 2.867	.006**	− 1.13E − 06	− 2.868	.005**	− 1.54E − 05	− 5.202	.000***	− 1.29E − 05	− 4.828	.000***
TD	7.26E − 05	3.644	.000***	5.06E − 05	3.045	.003**	0.0007	5.386	.000***	− .0005	4.551	.000***
Model summary	Adjusted R Square	0.815		Adjusted R Square	0.698		Adjusted R Square	0.489		Adjusted R Square	0.690
	F	10.310		F	23.75		F	12.971		F	22.907
	Sig	0.000		Sig	0.000		Sig	0.000		Sig	0.000
Hausman test	Chi sq. 15.093	Prob	0.178				Chi sq. 20.375	Prob	0,060

G.NPL gross NPL ratio %; SIZ firm size based on log of total assets; LD loan-to-deposit ratio%; EA equity-to-assets ratio %; CA capital adequacy ratio total; LLR loan loss reserves to gross NPLs %; LA liquid assets to total deposits and borrowings%; INF inflation % CPI; UNE unemployment, total (% of total labor force) (modeled ILO estimate); TC total cases of COVID and TD total deaths of COVID

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