Table 10 Panel regressions of bank efficiency (NIM) by periods (full sample, precrisis and crisis, and postcrisis)
Variable
Full sample period (2005–2015)
Precrisis and during crisis period
(2005–2009)
Postcrisis period (2010–2015)
Model 1
Model 2
Model 3
Model 13 Model 14 Model 15 Model 16 Model 17 Model 18
Constant
0.1200
0.001***
0.0718
0.541
0.2248
0.000***
0.2012
0.010***
−0.4725
0.129
0.0813
0.212
0.0477
0.003***
0.1035
0.009***
0.2391
0.000***
Deposits/Assets
0.0219
0.436
0.1383
0.038**
−0.0083
0.669
0.0524
0.475
0.2555
0.089*
0.0133
0.449
0.0254
0.022**
0.0111
0.664
0.0354
0.196
Loans/Assets
−0.0925
0.001***
−0.0938
0.195
−0.1268
0.001***
−0.1972
0.002***
0.1994
0.363
−0.0354
0.594
−0.0060
0.629
−0.0565
0.019**
−0.1895
0.000***
ROA
0.1113
0.366
−0.2767
0.384
1.0385
0.000***
−0.1444
0.566
−2.1589
0.017**
0.3402
0.017**
0.6497
0.000***
0.8153
0.000***
1.1122
0.000***
Other Earning Assets
−0.0277
0.165
−0.0089
0.838
−0.0543
0.034**
−0.0617
0.160
−0.0649
0.510
−0.0223
0.521
0.0074
0.398
−0.0326
0.075*
−0.0576
0.040**
Income Diversity
−0.0356
0.152
−0.0469
0.191
−0.0246
0.056*
−0.0322
0.602
−0.1049
0.446
−0.0188
0.224
−0.0090
0.374
−0.0063
0.564
−0.0123
0.433
Non-Interest Income
−0.0316
0.301
−0.0483
0.314
−0.0142
0.417
−0.0171
0.792
0.1030
0.574
0.0048
0.812
−0.0257
0.070**
0.0072
0.642
0.0148
0.461
Log(Size)
−0.0032
0.059*
−0.0077
0.041**
−0.0042
0.001***
−0.0093
0.115
−0.0014
0.903
−0.0016
0.305
−0.0019
0.003***
−0.0022
0.111
−0.0037
0.017**
Tier 1 Ratio
0.4726
0.000***
0.1078
0.004***
−0.1034
0.710
−0.0810
0.043**
0.2033
0.000***
0.2336
0.000***
Tangible Equity
−0.3564
0.001***
−0.1292
0.000***
0.2004
0.484
0.0991
0.014**
−0.1609
0.000***
−0.2315
0.000***
Liquid Assets
0.1315
0.050**
−0.1278
0.000***
0.6092
0.003***
−0.0259
0.644
−0.0649
0.007***
−0.1474
0.000***
Funding Fragility
−0.1862
0.000***
−0.0025
0.889
−0.2265
0.012**
−0.0131
0.312
−0.0442
0.027**
−0.0879
0.014**
Equity Volatility
−0.0118
0.014**
−0.0034
0.376
−0.0064
0.349
Log(Z)
−0.0028
0.113
−0.0014
0.402
−0.0073
0.048**
LISTED_D
0.0170
0.108
0.0206
0.251
−0.0107
0.057*
0.0387
0.072*
0.1284
0.012**
−0.0100
0.121
−0.0047
0.338
−0.0126
0.035**
−0.0153
0.016**
ISLAMIC_D
0.0049
0.416
−0.0157
0.116
−0.0060
0.118
0.0274
0.055*
0.0549
0.115
−0.0020
0.658
−0.0038
0.129
−0.0077
0.020**
−0.0109
0.012**
CRISIS_D
0.0164
0.016**
0.0280
0.001***
0.0043
0.091*
–
–
–
–
–
–
Number of
Observations
254
180
117
100
66
37
154
114
80
Number of Parameters 11
15
17
11
15
17
10
15
16
F
3.09
6.11
17.10
2.57
4.81
6.93
14.32
12.92
22.25
Prob > F
0.0010*** 0.0000*** 0.0000*** 0.0088*** 0.0000*** 0.0000*** 0.0000*** 0.0000*** 0.0000***
R-squared
0.1128
0.3414
0.7323
0.2243
0.5691
0.8472
0.4723
0.6267
0.8391
Adj R-squared
0.0763
0.2855
0.6895
0.1372
0.4508
0.7250
0.4393
0.5782
0.8014
Root MSE
0.0387
0.0398
0.0088
0.0571
0.0556
0.0044
0.1169
0.0105
0.0079
Breusch–Pagan test of
independence: chi2(6)
82.21
57.65
60.64
37.38
36.90
32.63
35.92
36.90
24.58
*Significance Level (p-value): p***
0.01, p**
0.05, p*
0.10
Note The sample includes 352 observations of 32 banks in the UAE over 11 years. The sample of conventional banks includes 242 observations,
and the sample of Islamic banks includes 110 observations. As the dependent variable to measure the bank’s level of cost efficiency, we use the Net
Interest Margin (NIM). The independent variables used in this analysis are bank-level characteristics, capital adequacy ratios, risk and ownership
structure measures. The regressions analysis tests the significance of the relationships between the dependent and explanatory variables, the control
variables, and the dummy variables for the whole sample, as well as for the samples of Islamic banks and conventional banks. We run the analysis
separately for the full sample period (2005–2015), precrisis and crisis period (2005–2009), and the postcrisis period (2010–2015)
Banking System in the MENA Region: A Comparative Analysis …
81
Variable
Full sample period (2005–2015)
Precrisis and during crisis period
(2005–2009)
Postcrisis period (2010–2015)
Model 1
Model 2
Model 3
Model 13 Model 14 Model 15 Model 16 Model 17 Model 18
Constant
0.1200
0.001***
0.0718
0.541
0.2248
0.000***
0.2012
0.010***
−0.4725
0.129
0.0813
0.212
0.0477
0.003***
0.1035
0.009***
0.2391
0.000***
Deposits/Assets
0.0219
0.436
0.1383
0.038**
−0.0083
0.669
0.0524
0.475
0.2555
0.089*
0.0133
0.449
0.0254
0.022**
0.0111
0.664
0.0354
0.196
Loans/Assets
−0.0925
0.001***
−0.0938
0.195
−0.1268
0.001***
−0.1972
0.002***
0.1994
0.363
−0.0354
0.594
−0.0060
0.629
−0.0565
0.019**
−0.1895
0.000***
ROA
0.1113
0.366
−0.2767
0.384
1.0385
0.000***
−0.1444
0.566
−2.1589
0.017**
0.3402
0.017**
0.6497
0.000***
0.8153
0.000***
1.1122
0.000***
Other Earning Assets
−0.0277
0.165
−0.0089
0.838
−0.0543
0.034**
−0.0617
0.160
−0.0649
0.510
−0.0223
0.521
0.0074
0.398
−0.0326
0.075*
−0.0576
0.040**
Income Diversity
−0.0356
0.152
−0.0469
0.191
−0.0246
0.056*
−0.0322
0.602
−0.1049
0.446
−0.0188
0.224
−0.0090
0.374
−0.0063
0.564
−0.0123
0.433
Non-Interest Income
−0.0316
0.301
−0.0483
0.314
−0.0142
0.417
−0.0171
0.792
0.1030
0.574
0.0048
0.812
−0.0257
0.070**
0.0072
0.642
0.0148
0.461
Log(Size)
−0.0032
0.059*
−0.0077
0.041**
−0.0042
0.001***
−0.0093
0.115
−0.0014
0.903
−0.0016
0.305
−0.0019
0.003***
−0.0022
0.111
−0.0037
0.017**
Tier 1 Ratio
0.4726
0.000***
0.1078
0.004***
−0.1034
0.710
−0.0810
0.043**
0.2033
0.000***
0.2336
0.000***
Tangible Equity
−0.3564
0.001***
−0.1292
0.000***
0.2004
0.484
0.0991
0.014**
−0.1609
0.000***
−0.2315
0.000***
Liquid Assets
0.1315
0.050**
−0.1278
0.000***
0.6092
0.003***
−0.0259
0.644
−0.0649
0.007***
−0.1474
0.000***
Funding Fragility
−0.1862
0.000***
−0.0025
0.889
−0.2265
0.012**
−0.0131
0.312
−0.0442
0.027**
−0.0879
0.014**
Equity Volatility
−0.0118
0.014**
−0.0034
0.376
−0.0064
0.349
Log(Z)
−0.0028
0.113
−0.0014
0.402
−0.0073
0.048**
LISTED_D
0.0170
0.108
0.0206
0.251
−0.0107
0.057*
0.0387
0.072*
0.1284
0.012**
−0.0100
0.121
−0.0047
0.338
−0.0126
0.035**
−0.0153
0.016**
ISLAMIC_D
0.0049
0.416
−0.0157
0.116
−0.0060
0.118
0.0274
0.055*
0.0549
0.115
−0.0020
0.658
−0.0038
0.129
−0.0077
0.020**
−0.0109
0.012**
CRISIS_D
0.0164
0.016**
0.0280
0.001***
0.0043
0.091*
–
–
–
–
–
–
Number of
Observations
254
180
117
100
66
37
154
114
80
Number of Parameters 11
15
17
11
15
17
10
15
16
F
3.09
6.11
17.10
2.57
4.81
6.93
14.32
12.92
22.25
Prob > F
0.0010*** 0.0000*** 0.0000*** 0.0088*** 0.0000*** 0.0000*** 0.0000*** 0.0000*** 0.0000***
R-squared
0.1128
0.3414
0.7323
0.2243
0.5691
0.8472
0.4723
0.6267
0.8391
Adj R-squared
0.0763
0.2855
0.6895
0.1372
0.4508
0.7250
0.4393
0.5782
0.8014
Root MSE
0.0387
0.0398
0.0088
0.0571
0.0556
0.0044
0.1169
0.0105
0.0079
Breusch–Pagan test of
independence: chi2(6)
82.21
57.65
60.64
37.38
36.90
32.63
35.92
36.90
24.58
*Significance Level (p-value): p***
0.01, p**
0.05, p*
0.10
Note The sample includes 352 observations of 32 banks in the UAE over 11 years. The sample of conventional banks includes 242 observations,
and the sample of Islamic banks includes 110 observations. As the dependent variable to measure the bank’s level of cost efficiency, we use the Net
Interest Margin (NIM). The independent variables used in this analysis are bank-level characteristics, capital adequacy ratios, risk and ownership
structure measures. The regressions analysis tests the significance of the relationships between the dependent and explanatory variables, the control
variables, and the dummy variables for the whole sample, as well as for the samples of Islamic banks and conventional banks. We run the analysis
separately for the full sample period (2005–2015), precrisis and crisis period (2005–2009), and the postcrisis period (2010–2015)
Banking System in the MENA Region: A Comparative Analysis …
81