FIN5000 Group 10 Assignment

Normality of the data: Descriptive Analysis
The Skewness and Kurtosis result from the descriptive analysis are used to determine the normality of the dataset; If the data set is normal
distrbution The Skewness values should be less than three (3) and Kurtosis values should be less than 10.
Normality Test: Table 1

ROAA CAPR LIQ FINR OPEF Size GDP INF
Mean -0.32 12.52 26.17 0.87 3.42 3.89 4.5 2.67
Median 0.6 8.15 30.4 0.92 3.46 3.97 5.85 2.03
Maximum 2 96.85 12.01 1.02 6.99 4.56 7.2 5.4
Minimum -25.78 1.9 5.75 0.03 2.88 2.46 -1.71 0.6
Std. Dev. 4.07 9.37 14.84 0.16 1.58 0.43 3.25 1.69
Skewness -2.26 2.06 -1.19 -2.06 -1.13 -1.35 -1.27 0.48
Kurtosis 9.33 8.78 2.5 7.78 4.8 5.34 2.93 9
The result from Table 1 shows that all of the data are within the targeted values , It stands for such data of variables are
distributed normally
Multicollinearity test:VIF Test
VIF determines the strength of the correlation between the independent variables. It is predicted by t
aking a variable and regressing it against every other variable. or VIF score of an independent variab
le represents how well the variable is explained by other independent variables.

Table 2 ： VIF Test
Table 2: It shows no multicollinearity appeared in this dataset where the tolerance values are more than
0.20 and the VIF are less than 10.
Regression Analysis:POLS Method (Total panel observations: 50=10x5)to determine the coefficient
of determination for each variable involved.
Table 3: The Pooled Ordinary Least Squares (POLS) Regression
Variable Coefficient StrL Error t -Statistic Prob.
C -0.1806 0.0822 -2.1946 0.0291

CAPR 0.2312 0.0399 3.2820 0.0012
LIQ -0.0673 0.0110 -6.0813 0.0060
FINR -0.0441 0.0089 -4.9462 0.0024
OPE -0.3836 0.0641 -3.1038 0.0042
BS 0.4566 0.0245 4.6585 0.0011
GDP 0.0125 0.0034 3.5898 0.0004
INF 0.0208 0.0095 2.1751 0.3930
R-squared 0.7001 Mean dependent var 0.0014
Adjusted R- 0.7234 S.D. dependent var 0.0262
squared
S.E. of regression 0.0178 Akaike info criterion -5.1765
Sum squared resid 0.0782 Schwarzcriterion -5.0512
Log livelihood 666.4275 HannanOuinn enter. -5.1261
F-stalislic 45.01 Durtoin-Watson stat 1.5416
Prob.(F-stafstic)
0.0000
Adjusted R-square is 72.3% which means that 72.3% variation in the dependent variable is explained by the independent variables present in our
model.Another 27.7% of other variables are not involved in our study. F-statistic is 45.01 and it is highly significant and p value is 0.0000<0.05
(significance level) which shows that our model is valid, relevant and fit for the given study.
Four independent variables LIQ, FINR and OPE show negative relation with the profitability indicator ROA and remaining three independent
variables CAPR, BS , GDP , INF show positive relation with ROA.
Variables Hypothesis Results Support
CAPR H0:There is no significant relationsip between The coefficient estimation for CAPR is 0.2312 with t-value of 3.2820 (p<0.05) , it indicated that the increase AzizUr Rehman,Ejaz Aslam
CAPR and ROA. in CAPR 1 percent, the ROA will increase at 0.2312 percent. Therefore ： reject null hypothesis H0 and Anam lqbal(2021)
There is a positive significant relationship between CAPR and ROA.
LIQ H0:There is no significant relationsip between LIQ The coefficient estimation for LIQ is -0.0673 with t-value of -6.0813(p<0.05), it indicated that the increase Molyneux and Thorton (1992)
and ROA. in LIQ 1 percent, the ROA will decrease at 0.0673 percent. Therefore ： reject null hypothesis H0 and fadzlan (2009).
There is a negative significant relationship between LIQ and ROA.
FINR H0:There is no significant relationsip between The coefficient estimation for FINR is -0.0441 with t-value of -4.9462(p<0.05), it indicated that the increase Wani, A. A., & Dar, S. A. (2015)
FINR and ROA. in FINR 1 percent, the ROA will decrease at 0.0441 percent. Therefore: reject null hypothesis H0
There is a negative significant relationship between FINR and ROA.
OPE H0:There is no significant relationsip between OPE The coefficient estimation for OPE is -0.3836 with t-value of -3.1038 (p<0.05), it indicated that the increase Ndolo (2015)
and ROA. in OPE 1 percent, the ROA will decrease at 0.3836 percent.Therefore: reject null hypothesis H0
There is a negative significant relationship between OPE and ROA
BS H0:There is no significant relationsip between BS The coefficient estimation for BS is 0.4566 with t-value of 4.6585(p<0.05), it indicated that the increase in Athanasoglou et al.(2008 ）
and ROA. BS 1 percent, the ROA will increase at 0.4566 percent.
Therefore: reject null hypothesis H0
There is a positive significant relationship between BS and ROA
GDP H0:There is no significant relationsip between The coefficient estimation for GDP is 0.0125 with t-vaule of 3.5898(p<0.05), it indicated that the increase in
GDP and ROA. GDP 1 percent, the ROA will increase at 0.0125 percent. Therefore:reject null hypothesis H0 Bikker and Hu, 2002
There is a positive significant relationship between GDP and ROA
INF H0:There is no significant relationsip between INF The coefficient estimation for INF is0.0208 with t-value of 2.1751(p>0.05) , it indicated that the increase in Wasiuzzaman and Ahmed
and ROA. INF 1 percent, the ROA will increase at 0.0208 percent.Therefore:Fail to reject null hypothesis H0 Tarmizi (2010)
There is a positive but insignificant relationship between INF and ROA.

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Normality of the data: Descriptive Analysis

Normality Test: Table 1

le represents how well the variable is explained by other independent variables.

C -0.1806 0.0822 -2.1946 0.0291

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