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 Indian Journal of Finance and Banking; Vol. 1, No. 2; 2017 

                                                         ISSN 2574-6081  E-ISSN 2574-609X 

 Published by Centre for Research on Islamic Banking & Finance and Business 

 

42 
 

 

Impact of Basel II & III Implementation to Mitigate Bank Risk: A 

Study on Al-Arafah Islami Bank Limited 
 

 
Sk. Alamgir Hossain1 

K. M. Anwarul Islam2 

 
1Department of Finance, Faculty of Business Studies, Jagannath University, Dhaka,Bangladesh. 
1Huazhong University of Science and Technology Wuhan,Hubei, China. 
2Department of Business Administration, The Millennium University, Dhaka, Bangladesh  

Correspondence: Sk. Alamgir Hossain, Department of Finance, Faculty of Business Studies, Jagannath 

University, Dhaka, Bangladesh .Email: alamgir2783@yahoo.com 

 

 

Received: November 14, 2017,   Accepted: November 22, 2017    Online Published: November 23, 2017  

 

 

Abstract 

This study has examined the implementation process, effects, outcomes, of Basel II & reforms of Basel III 

within the Al-Arafah Islami Bank Limited. The purpose of Basel II is to create regulation about how many 

capital banks need to put away to guard against the financial and operational risk. Basel III newly introduced 

accord provides stricter approach toward managing risk with capital in order to strengthen capital & liquidity 

structure of international banking system. The purpose & aim of this study is to analyze capital adequacy 

framework whether it is complied with the regulatory supervisions under the prescription of Bangladesh bank as 

well as its capability to absorb shocks arising from financial and economic stress. Published disclosures & 

financial statements of last five years are used to collect data. OLS regression model is used to find out the 

relationship between profitability and capital adequacy requirement in terms of relevant influencing variables 

(e.g. asset turnover, size of the firm, capital adequacy ratios).capital adequacy ratio of this bank is higher than 

minimum standard level. The average capital adequacy ratio (CAR) is about 13.78%. The result of regression 

analysis is statistically significant and there is a positive relationship between capital and return on asset 

(ROA).If the capital adequacy requirement is increased the return on asset (ROA) will be increased. Islamic 

Banking sector has some uniqueness compared to the conventional Banking sector. Products are linked with real 

economic activities that are why financial crisis of 2008 did not create any extreme pressure on this sector. 

 

Keywords: Basel II, Credit Risk, Market Risk, Operation Risk, Basel III, Capital Conservation Buffer, 

Leverage Ratio, Countercyclical Buffer. 

 

1. Introduction 

In 2004 The Basel Committee on Banking Supervision presented a revised Framework which is commonly 

known as Basel II Accord due to some difficulties which are not covered by Basel I. Basel 2 rests on three 

pillars. Pillar 1 represents capital adequacy. The core objective of pillar 1 is that credits institutions are well 

capitalized.Banks have to maintain Minimum capital requirement (MCR) 10% of total Risk-weighted assets.  



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Banks with capital more than 10% are considered as well capitalized banks. 8 percent indicates undercapitalized 

and & 5% means significantly undercapitalized. Pillar 2 is the firm review of capital adequacy as well as 

prudential supervision by national authorities. And pillar 3 is an active use of market discipline to support 

reliable financial disclosure. Basel 2 addresses credit risk, market risk, and operational risk. The bank must 

reassure the capital adequacy for every one of their exposures along these three lines of risk. 

Credit risk: credit risk arises when the counterparty will fail to meet the obligations on the agreed terms.  

Credit risk basically deals with transaction risk and portfolio risk. There are two types of approaches for 

evaluating credit risk say, standardized approach and internal rating based approach. 

Market risk: Market risk is the risk arising from the adverse movements in market price. For instance: interest 

rate risk, foreign exchange risk. Standardized approach & internal models approach are used for assessing 

market risk. 

Operational risk:Failure of the operating system in the bank due to certain reasons say fraudulent activities, 

natural disaster, human error, sabotage etc. there are three types of approaches(basic indicator, standardized and 

advanced measurement approach) are used for assessing operational risk. 

2. Literature Review 

As said by Van Roy (2005) Banks hold better knowledge, measure & control of sophisticated risks they face 

with the inception of Basel II. Basic risks that fall under these are credit risks, operational risks, and market 

risks. There are various levels of complexity in the calculation because of defined. Operation risks use basic 

indicator approach while market risk adopts value at risk (VAR). Managing minimum capital requirement most 

Banks have adopted the standardized approach to credit risks. A Survey conducted by (KPMZ 2003) found that 

38% of banks of 294 were restoring to the standardized approach. Some banks have their own internal rating 

based approach for assessing risks. He further clarifies that different credit agencies provide different rating 

none of the percentages has gone beyond 10%. 

Stigler (1971) and Beck et al. (2006) provided the view that supervisors vested with stronger powers to 

supervise banking activity can improve the corporate governance of banking institutions reduce corruption in 

bank lending activity. However, Becker et al, (1983) argued that supervisors are more concern for their own 

welfare rather than social welfare. DjanKov et al. (2006) found that politicians negatively influence the bank's 

lending system. Fernandez Gonzalez (2005) found that countries that have low or weaker accounting & auditing 

system tend to have productive banking supervision & sound banking system.  

Abijit Sarkar and L H Bhole (2008) found that in developing countries it is used as a yardstick to upholding 

better banking regulations that ensure the financial & operational soundness of the banking system. He further 

clarified that effective market discipline has the potential to reinforce minimum capital standards. David 

Vanasse (2007) examines that disclosure and market discipline pillar is only useful for developing countries. It 

does not meet complex issues of advanced countries. 

Chabanel (2011) observes that implementation of Basel III creates challenges & opportunities for the Banking 

industry. According to his conclusion, it builds a strong basis for further development within the banking 

industry and it provides assurance to overcome difficulties of past. According to research conducted by 

Aliaga-Diaz, Olivero and (2011) analyzed macroeconomic effects of anti-cyclical bank capital requirements 

such as the countercyclical buffer of Basel III & it is expected to reduce consumption volatility by some 4% to 

5%. 

Gauthier et al. (2010) explained a stress testing model to engender loss distributions under severe but plausible 

scenarios. Losses arise from systematic spillover effects, either from counter-party exposures in the interbank 



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markets or market to the market value of bank's portfolios. Meanwhile, Miles et al. (2011) described an assumed 

probability distribution for changes in annual GDP to calculate the probability of banking crisis. 

Ahmed et al. (2015) found that there is a significant relationship between capital adequacy ratio and the 

profitability of commercial banks of Bangladesh & higher capital adequacy rate ensures higher profitability.  

3. Objectives of the Research  

This paper examines both Basel II & III accords, reviews the implications of the accords for the banking system 

in Bangladesh particularly (Al-Arafah Islami bank limited). Some other objectives: 

 To review both Basel II & III accords and identify the three basic pillars. 

 To enumerate the key proposals of Basel III and its impact on financial performance of Al-Arafah 

Islami bank limited. 

 To identify the changes brought in Basel III and to assess the impact of improved capital requirement. 

 Is there any relationship between capital adequacy requirement and banks profitability? 

4. Research Methodology 

This paper has adopted secondary data from website, and publications of Bangladesh bank and different 

types of journals and articles. Data for this study also collected from the financial statements of Al-Arafah 

Islami Bank limited. For quantitative analysis, EViews 9 version is used with 95 percent confidence level is 

taken into consideration.   

5. Data Analysis and Interpretation 

5.1 Capital Base 

Basel- II accord represents three-Tier capital concept with a view to complying with the requirements which are 

set to encourage the banks to support their capital positions considering their risk. Tier-1 capital is reliable than 

tier-2. Tier –III (additional supplementary capital) is considered only for market risk. 

5.1.1 New features in BaselIII 

 Supplementing the Risk-Based Capital Requirement with a Leverage Ratio 

One of the core features of the crisis was the build-up of excessive on and off-balance sheet leverage in the 

banking industry. In many cases bank made excessive leverage while still showing strong risk-based capital 

ratios. Thus there were a downward pressure on asset prices, a decline in bank capital and contraction in credit 

availability. Under Basel, 3 leverage ratios have been introduced to constrain leverage & additional safeguard 

against model risk and measurement error by supplementing the risk-based measure. 

 Reduction Procyclicality and Promoting Countercyclical Buffers 

The propensity of market participants to act in a procyclical manner has been amplified through a variety of 

channels, as well as accounting standards for both market to market assets and held to maturity loans. A number 

of measures have been taken to address reducing cyclicality of the minimum capital requirement, 

forward-looking provisions, conserving capital to build buffers. 

 Addressing Systematic Risk and Interconnectedness 

The recent global crisis has added the magnitude of interconnectedness as a key dimension of systemic risk. The 

Basel committee designed a scheme comprising both qualitative and quantitative indicators to assess the 

systematic importance of financial institutions at a global and domestic level. Some effective points say capital 

incentives, a higher capital requirement for trading and derivative activities, higher capital requirements for 

inter-financial exposures, liquidity requirement that penalize excessive reliance on short-term interbank funding 

to support longer-dated assets.  

 



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5.2 Global Liquidity Standard 

A strong liquidity standard has been designed by Basel committee to ensure a sound competitiveness & stability 

in the banking sector. The committee in 2008 published principles for sound liquidity risk management and 

supervision. The committee developed two minimum standards named liquidity coverage ratio (LCR) & the net 

stable funding ratio (NSFR). The liquidity coverage ratio indicates that bank should hold highly liquid assets to 

meet a short-term obligation. High quality liquid assets can be converted into cash within 30 calendar days. The 

main objective of NSFR is to limit over-reliance on short-term wholesale funding assessment of liquidity risk 

across all on and off-balance sheet items. 

5.3 Capital Conservation Buffer 

Banks are required to maintain a capital conservation buffer of 2.5% above the regulatory minimum capital 

requirement of 10%, comprised of common equity tier 1 capital. Banks should not distribute dividends or 

bonuses in case capital levels falls within the range. 

Table 1: phase-in arrangements for Basel 3 implementation in Bangladesh 

 2015 2016 2017 2018 2019 

Minimum common Equity 

Tier 1 (CET1) capital Ratio  

4.50% 4.50% 4.50% 4.50% 4.50% 

Capital conservation Buffer - .625% 1.25% 1.875% 2.50% 

Minimum CET1 plus capital 

conservation buffer 

4.50% 5.125% 5.75% 6.375% 7.00% 

Minimum total capital ratio 5.50% 5.50% 6.00% 6.00% 6.00% 

Minimum capital plus capital 

conservation buffer 

10.00% 10.00% 10.00% 10.00% 10.00% 

Phase-in of deductions from 

CET1   

     

Excess investment over 10% 

of a bank’s equity in the equity 

of banking financial and 

insurance entities  

20% 40% 60% 80% 100% 

Phase-in of deductions from 

tier 2 revaluation reserves 

(RR) 

     

RR for fixed Assets, securities, 

and Equity Securities 
20% 40% 60% 80% 100% 

Leverage ratio  3% 3% 3% 

readjustment 

Migration to 

pillar 1 

3% 

Liquidity Coverage Ratio ≥100% 

(from 

Sep.) 

≥100% ≥100% ≥100% ≥100% 

Net stable funding Ratio ≥100% 

(from 

Sep.) 

≥100% ≥100% ≥100% ≥100% 

 

5.4 The implication of Basel II & III in AIBL 

To become more risk-sensitive to credit, market & operation risk banking institutions have to follow & maintain 

minimum capital prescribed by Bangladesh bank. The regulatory capital is composed of: 

 Core capital (Tier- 1) 



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 Supplementary capital (Tier-2) 

 Additional supplementary capital (Tier-3) [only for market risk] 

Tier-1 capital consists of highest quality capital items it helps a bank to absorb losses on an ongoing basis. It 

includes paid-up capital, statutory reserve, retained earnings, minority interest in subsidiaries. In 2012 54.55% 

of Tier-1   is from paid-up capital & 23.75% is statutory reserve. The major portion of Tier-2 capital is general 

provision & revaluation. In 2010 the bank increased its Tier-1 capital by issuing right shares worth 2338.6 

million. Policies and processes for mitigating credit risk, market risk & operation risk. The bank has established 

a framework that defines structure, role, responsibilities, and the processes to identify, quantify and manage risk 

within the framework. This policy and procedures are being updated from time to time with the adoption of new 

techniques for managing risk in the line with the socio-economic scenario and investment environment in 

Bangladesh. Duration, PV, Exposure and Gap limits, VaR are used for mitigating market risk. The bank offers 

attractive pay package to its employees based on performance and merit. Basic indicator approach is used to 

compute charge against operational risk. 

Table 2 Capital ratios of AIBL 

Year 2011 2012 2013 2014 2015 

Total amount of capital 

under tier 1 
11924.5 13073.14 13500.51 15620.57 18244.48 

The total amount of tier 2 

and tier 3 

1123.4 1731.59 1511.75 1732.06 4828.03 

Total eligible capital 13047.9 14804.73 15012.26 17352.63 23072.51 

Total risk-weighted Asset 96866.37 125998 111037 128253 138573.63 

Capital adequacy ratio 13.47% 11.75% 13.52% 13.53% 16.65% 

Core capital to RWA 12.31% 10.37% 12.16% 12.18% 13.17% 

 

5.5 Capital & Profitability (Risk): Relationship and Relevant Issues 

It is no surprise that higher capital requirement would influence the profitability of a bank (Christian et al., 

2008).Capital adequacy has a great influence on Banks profitability. It is not only a regulatory component but 

also a weapon for ensuring profitability. 

Dependent Variables: 

In case of profitability, “return on asset” (ROA) is considered as appropriate variable because bank regulator 

and analysts believe that ROA gives appropriate proxy for profitability (Gilbert and Wheelock, 2007) 

Independent variables: 

 Capital adequacy ratio 

 Asset turnover ratio 

 Leverage 

 Operating efficiency 

 Firm size 

Capital Adequacy Ratios: considering two types of capitals and non-risk weighted and risk-weighted 

assets, capital adequacy ratios that are considered in our models are: 

 Core capital (Tier 1) to Total Assets 

 Total Capital (Tier 1+2) to Total Assets 

 Core capital (Tier 1) to Total RWA 



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 Total Capital (Tier 1+2) to Total RWA 

Four different versions of capital adequacy ratios further lead to individual tests of following sub-hypothesis: 

Identification of four different versions of capital adequacy ratios further lead to individual tests of following 

sub-hypothesis: 

H1A : Core capital to total Asset ratio has significant relationship with bank capital 

H1B: total capital to total asset ratio has significant relationship with bank capital 

H1C : Core Capital to total RWA ratio has significant relationship with bank capital 

HID: total capital to total RWA ratio has significant relationship with bank capital   

 

Table3: Variables and Respective Formulas 

Variables Formula Symbol Source 

Return on Assets (Asset) Net income after 

taxes/total assets 

ROA Gilbert and Wheelock 

(2007) 

Core capital/Total 

Assets 

Tier 1 capital/total assets CCTA Hutchison and cox 

(2006) 

Total Capital/Total 

Asset 

Total risk-based 

capital/Total Assets 

TCTA Hutchison and cox 

(2006) 

Core capital/total 

risk-weighted Assets 

Tier 1 capital/Total 

Risk-Weighted Assets 

CCRWA Hutchison and cox 

(2006) 

Total Capital/Total 

Risk-Weighted Assets 

Total risked-based 
capital/total 

Risk-Weighted Assets 

TCRWA Hutchison and cox 

(2006) 

Asset Turnover Sales/Total Asset AT Cristian et al (2008) 

Leverage Debt/total Asset DTA Cristian et al (2008) 

Firm Size Natural Logarithm of total 

Asset 

LN Ghosh et al.(2003) 

Operating Efficiency 

Ratio(cost income ratio) 

Operating 

expenses/operating 

incomes 

CIR Christian et al. (2008) 

 

5.6 Model 

The model and approach used in this study were found in the established literature (Lazaridis and 

tryfonidis 2006 gilbert and Wheelock 2007). 

ROA = f(capital Adequacy, AT, DTA, CIR, Ln) 

The core panel OLS regression equation for ROA: 

 

ROAit= α0 + α1CCTAit + α2TCTAit + α3CCRWAit + α4TCRWAit + α5CIRit + α6SIZEit + α7ATit + 

α8DTAit +εi 

 

Descriptive Statistics of the Variables: Table 02 represents the summary statistics of the variables of this study. 

Total observations of this study were 13. The bank had a mean (average) return on asset of 1% with a standard 

deviation of approximately0 .53 percent. It indicates that Al-Arafah Islami Bank is not highly levered. The mean 

of this Bank is 6.23 percent with a standard deviation of 2.23 percent. Core capital to risk-weighted asset is 

lower than total capital to risk-weighted asset. 

 



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Table 4: Descriptive statistics of the Variables 

Variables No. of 

observati

ons  

Mean  Median Maximum Minimum Standard deviation 

Return on Asset 13 1.37 1.10 2.65 .8792 .53977 

Asset Turnover(AT) 13 9.822 10.38 11.81 7.77 1.39 

Operating 

Efficiency(cost 

Income Ratio) CIR   

13 37.47 33.25 67.40 26.25 13.07 

Size (natural 

logarithm of total 

assets) LN 

13 12.22 12.22 13.83 10.52 1.017 

Core capital to 

risk-weighted asset 

(CCRWA) 

13 13.50 13.60 17.77 9.68 2.50 

Total Capital to Risk 

Weighted 

Asset(TCRWA)  

13 16.31 15.36 17.77 9.68 2.50 

Core Capital to Total 

Asset(CCTA) 

13 9.12 8.75 12.94 7.09 1.62 

Leverage (debt to 

total Asset)/DTA 
13 6.23 5.58 10.70 1.96 2.37 

Total Capital to Total 

Asset(TCTA) 

13 10.89 10.65 14.21 8.20 .1959 

 

5.7 Regression 

Under the panel regression model, ROA is regressed against CCRWA, TCRWA, CCTA, TCTA and operating 

efficiency (CIR) in four different models. Regression estimates of the various capital adequacy determinants on 

asset (ROA).  

Table 5: Regression Analysis 

Independent Variables Model 1 Model 2 Model 3 Model 4 

Intercept 5.34 5.416 10.62 10.83 

Core capital to total 

Asset(CCTA) 

.2469 - - - 

Total capital to total 

Asset(CCTA)  

- .2219 - - 

Core capital to Risk-Weighted 

Asset(CCRWA) 

- - 0.1125 - 

Total capital to Risk Weighted 

Asset(TCRWA) 

 -  0.1027 

Cost Income Ratio(CIR) .017046 0.002175 -0.01948 -.02424 

Natural Logarithm of Total 

Asset (SIZE) 

-1.5222 

 

-0.5487 -0.918 -.9913 

Asset Turnover (AT) -0.073 0.02989 0.05478 0.1285 

Debt to total Asset(DTA) -0.24 -0.021233 0.1022 0.0988 

F-Statistics 3531.46 157.91 82.11 64.82 



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P-Value .0000 0.0006 .0065 0.0154 

R2 0.9996 0.9912 .9832 0.978 

Adjusted R2 0.9993 0.9849 .9712 0.963 

 

The first model regresses the Core Capital Ratio (CCTA) with bank profitability (ROA). This result shows core 

capital ratio is statistically significant and it has a positive relationship with ROA. The equation also had R2 

and Adjusted R2 values of 99.96% and 99.93% respectively meaning that about 99.96% of the variations of 

ROA can be explained by CCTA and the other independent variables of this model.  

The second model regresses the Core Capital to Total Asset Ratio (TCTA) with bank profitability (ROA). This 

result shows Core Capital to Total Asset Ratio is statistically significant and it has a positive relationship with 

ROA. The equation also had R2 and Adjusted R2 values of 99.12% and 98.49% respectively meaning that 

about 99.12% of the variations of ROA can be explained by TCTA and the other independent variables of this 

model.  

The third model regresses the Core Capital to Risk Weighted Asset Ratio (CCRWA) with bank profitability 

(ROA). This result shows Core Capital to Risk Weighted Asset Ratio is statistically significant and it has a 

positive relationship with ROA. The equation also had R2 and Adjusted R2 values of 98.32% and 97.12% 

respectively meaning that about 98.32% of the variations of ROA can be explained by CCRWA and the other 

independent variables of this model.  

The fourth model regresses the Total Capital to Risk Weighted Asset Ratio (TCRWA) with bank profitability 

(ROA). This result shows Total Capital to Risk Weighted Asset Ratio is statistically significant and it has a 

positive relationship with ROA. The equation also had R2 and Adjusted R2 values of 97.80% and 96.30% 

respectively meaning that about 97.80% of the variations of ROA can be explained by TCRWA and the other 

independent variables of this model.  

6. Conclusion 

The Islamic financial system has some distinctiveness that should be properly addressed while formulating 

capital guidelines for Islamic financial organizations. Leverage, which played a major role in the recent financial 

crisis, cannot be produced greatly in this system. Islamic financial products should be linked with real economic 

activities like trading, production etc. These items cannot be based on another financial contract since Shariah 

restricts trading of debt and undue speculation. As the Islamic financial products are asset-based, they often bear 

market risk (probability of loss from reduction in market price) to some larger extent. They also have some other 

unique risks like displaced commercial risk (commercial force to pay returns that exceed the rate that has been 

earned on its assets financed by mudaraba depositors). Capital adequacy ratio of Al-Arafah Islami Bank Limited 

is higher than the standard level. Based on regression analysis it is found that there is a significant relationship 

between capital adequacies with the profitability of AIBL.    

References 

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Ahmed, S., Ahmed, S., Islam, N. and Ullah, G. (2015).Impact of Basel II Implementation on the Financial 

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Financial Crisis and Beyond. SSRN Electronic Journal. 

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Federal Reserve Bank, St. Louis Rev., 22, 515-532. 

Hakenes,H.,and Schnabel, I. (2010). Bank size and risk-taking under Basel II.Journal of Banking and 

Finance,35, 1436–1449.doi: 10.1016/j.jbankfin.2010.10.031 

Hess, K., and Francis, G. (2004). Cost income ration Benchmarking in Banking, Benchmarking. An 

International Journal,3,pp.303-319  

K.P.M.G (2011).Basel –III– Issues and Implications. International USA Retrieved from: 

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plications.pdf 

Prakash, Anupam (2008). Evolution of the Basel framework on Bank capital Regulation, Reserve bank of India 

occasional papers, 29 (2). Monsoon 2008 

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Panel Approach. SSRN Electronic Journal. 

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International Study. SSRN Electronic Journal. 

Appendix 

 

 

 

 

 

 

 

 

 

 

 

 

Dependent Variable: ROA

Method: Least Squares

Date: 06/07/16   Time: 15:54

Sample: 2008 2020

Included observations: 13

Variable Coefficient Std. Error t-Statistic Prob.  

C 5.342994 0.304981 17.51908 0.0000

CCTA 0.246950 0.008197 30.12819 0.0000

AT -0.073904 0.011670 -6.332763 0.0004

DTA -0.024199 0.006688 -3.618086 0.0085

CIR 0.008939 0.001213 7.366465 0.0002

LN -0.464984 0.015543 -29.91643 0.0000

R-squared 0.999604     Mean dependent var 1.373167

Adjusted R-squared 0.999321     S.D. dependent var 0.539771

S.E. of regression 0.014069     Akaike info criterion -5.385701

Sum squared resid 0.001385     Schwarz criterion -5.124955

Log likelihood 41.00706     Hannan-Quinn criter. -5.439296

F-statistic 3531.465     Durbin-Watson stat 2.773704

Prob(F-statistic) 0.000000

http://www.bis.org/publ/bcbs189.pdf
http://www.kpmg.com/global/en/issuesandinsights/articlespublications/documents/basell-iii-issues-implications.pdf
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Dependent Variable: ROA

Method: Least Squares

Date: 06/07/16   Time: 15:56

Sample: 2008 2020

Included observations: 13

Variable Coefficient Std. Error t-Statistic Prob.  

C 5.416119 1.467926 3.689640 0.0078

TCTA 0.221904 0.037918 5.852256 0.0006

AT 0.029898 0.050861 0.587846 0.5751

DTA -0.021233 0.033151 -0.640501 0.5422

CIR 0.002175 0.005105 0.425943 0.6829

LN -0.548708 0.067160 -8.170168 0.0001

R-squared 0.991212     Mean dependent var 1.373167

Adjusted R-squared 0.984936     S.D. dependent var 0.539771

S.E. of regression 0.066250     Akaike info criterion -2.286721

Sum squared resid 0.030724     Schwarz criterion -2.025975

Log likelihood 20.86368     Hannan-Quinn criter. -2.340316

F-statistic 157.9151     Durbin-Watson stat 2.310689

Prob(F-statistic) 0.000000

 

 

Dependent Variable: ROA

Method: Least Squares

Date: 06/07/16   Time: 15:57

Sample: 2008 2020

Included observations: 13

Variable Coefficient Std. Error t-Statistic Prob.  

C 10.62601 1.686454 6.300799 0.0004

CCRWA 0.112537 0.029430 3.823912 0.0065

AT 0.054783 0.069818 0.784648 0.4584

DTA 0.102265 0.026200 3.903260 0.0059

CIR -0.019487 0.003221 -6.049611 0.0005

LN -0.918310 0.085435 -10.74861 0.0000

R-squared 0.983236     Mean dependent var 1.373167

Adjusted R-squared 0.971261     S.D. dependent var 0.539771

S.E. of regression 0.091504     Akaike info criterion -1.640822

Sum squared resid 0.058611     Schwarz criterion -1.380076

Log likelihood 16.66534     Hannan-Quinn criter. -1.694417

F-statistic 82.11155     Durbin-Watson stat 2.205877

Prob(F-statistic) 0.000005

 

Dependent Variable: ROA

Method: Least Squares

Date: 06/07/16   Time: 16:00

Sample: 2008 2020

Included observations: 13

Variable Coefficient Std. Error t-Statistic Prob.  

C 10.83587 1.900031 5.702997 0.0007

TCRWA 0.102764 0.032260 3.185539 0.0154

AT 0.128529 0.080881 1.589123 0.1561

DTA 0.098801 0.030296 3.261248 0.0138

CIR -0.024240 0.003228 -7.509853 0.0001

LN -0.991314 0.110004 -9.011614 0.0000

R-squared 0.978861     Mean dependent var 1.373167

Adjusted R-squared 0.963762     S.D. dependent var 0.539771

S.E. of regression 0.102752     Akaike info criterion -1.408958

Sum squared resid 0.073906     Schwarz criterion -1.148212

Log likelihood 15.15823     Hannan-Quinn criter. -1.462553

F-statistic 64.82916     Durbin-Watson stat 2.194520

Prob(F-statistic) 0.000010

 

 

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