Economics and Finance Review Vol. 2(2) pp.

26 36, April, 2012

Available online at http://www.businessjournalz.org/efr

ISSN: 2047 - 0401

Banking Relationships Number, Firm Credit and Corporate Performance in Tunisia

ANNABI AYA (Corresponding author)
PhD student on Finance
Faculty of Economic Science and Management of Tunis-FSEGT
E-mail: annabiaya82@hotmail.com
DJELASSI MOULDI
LEO Universit dOrlans, & Higher School of Economics and Business of Tunis ESSECT
E-mail: mouldidjlassi@yahoo.fr
ABSTRACT
The aim of this paper is to investigate the impact of bank relationships on firm credit and performance for
selected Tunisian companies. We used an econometric model based on panel data analysis relative to 394
Tunisian firms from different sectors and with different characteristics for the period of 2001-2008. In our
model, credit is the total credit of company and performance is measured by return on equity and return on
assets which are considered the best indicators of firms profit. Our empirical results show that
the Tunisian companies having several banking relations have more funds but they are less powerful than those
with exclusive relations.
Keywords: Banking relationships number, Exclusive banking relationship, Multiple banking relationship
Corporate performance, Corporate credit, Panel data.
1. INTRODUCTION
Being the essential vehicle of the savings and the main source of financing, the banking system
remains the cornerstone of the financial system. Thus, banks play a crucial role in financing and monitoring
companies. It is thus interesting to note that, when it is not possible to evaluate the possibility of refunding
associated with loan applications by potential borrowers and in case it raises its interests, the bank is likely to
choose the riskiest projects. This banking supervision is supported by the maintenance of the private
informational relation between the bank and its customers.
Within this framework, the bank has a relative advantage compared to the other creditors, which gives it the
opportunity to reduce the costs research costs and date assessment. This banking knowledge is accessible
thanks to the extension of a private informational network between the bank and its customers.
Following the reforms of banking and financial activities within the developed and emerging countries, several
theoretical and empirical studies gave considerable attention to the emergence of the multiple banking
relations and/or exclusive ones (Petersen and Rajan, 1994; Elyasiani and Goldberg, 2004). Academicians
and experts working on this orientation are checking whether it is more beneficial for the company to maintain
an exclusive relation or on the contrary, it is more interesting to opt for multiple relations.
As the exclusive relation has the advantages which might improve the performance of companies; they are also
at the origin of their lack of fund and some inconveniences which can reduce the firm performance especially
for micro and small enterprises facing a transitory difficult situation. In addition, if the bank refuses financing its
client, firms might face serious problems of liquidity. Once the company does not find the necessary funds to
finance its investment, its performance is seen as deteriorating. This situation occurs in economies characterized
by a fragile banking system and an uncertain economic environment. In this case, a multiple bank relationships
are more attractive. Multiple bank relationships are beneficial for both firms and banks. Firms ensure the
liquidity they need when a bank refuses financing and banks use the multiple relationships to diversify their
lending risk (Carletti et al.2007) and can reduce the risk of premature liquidation (Detragiache 2000).
The objectives of this study are to check if the choice of banking relations number of the Tunisian companies
can influence its credit and its performance for selected Tunisian firms for the period of 2001-2008. The sample
includes 394 enterprises from different sectors, industry, service and trade and with different characteristics.
Credit is the total of credits of the company and performance is measured by the return on assets and the return
on equity which are considered as the best indicators of the firms liability structure. More precisely, we observe

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if there is a difference on the level of the credit and performance between the company with exclusive relation
and the one having multiple contacts. Thus, we check the following assumptions:

Multiple bank relationships improve the credits of companies.

The exclusive relation of banking improves the performance of the Tunisian company.

The articulation of this paper is the following: the first part will be devoted to listening theoretically the
advantages and disadvantages of banking relationships number. As for the second part, we will test this
relation empirically. Finally, we will draw conclusion.
2.

ADVANTAGES AND DISADVANTAGES OF BANKING RELATIONSHIPS NUMBER:

LITERATURE REVIEW
In this section, we study, mainly, the theoretical contributions relating to the advantages and disadvantages of
the exclusive relations as well as multiple ones together with their effects on the availability of loans and the
performance of the companies.
2.1. Advantages of an exclusive banking relationship for the credit and the Performance of a company
The existing literature has largely discussed the importance of an exclusive banking relation. Raghavendra,
(2000) and Harhoff and Krting, (1998) have shown, that it is more advantageous for a company to have a
single bank rather than with several banking relations. On the one hand, the quality of information between the
company and the bank is better shared and consequently there are comparative advantages of information for the
two economic agents. In addition, it allows a better banking supervision.
The uniqueness of the bank- company relationship allows a good perception of the debtor by his creditor as well
as a confidence between the partners (Raghavendra, 2000). The company finds that such a relation allows it an
easier access to the loans. Moreover, it makes it possible for the bank to evaluate the quality of the companies
applying for loans by providing it with an informational advantage (Boot, 2000). In return, the bank offers them
the capital they need and assumes the risk relating to the process of financing.
The basis of banking relations insists on the confidentiality of the information gathered by the banks (Shepherd
and Udell, 2002). The main aim is to ensure an informational advantage: one should not reveal specific
information about a company to its rivals.
Often, in a context of asymmetry of information, the bank is presented to the risk of selection and consequently,
it is inapt to distinguish the solvent borrowers from insolvent ones. This can lead to a conflict situation between
the two parts following the insufficiency of the informational exchange. For this reason, a good banking
supervision proves to be important to know potential borrowers.
Indeed, the financial intermediation is a monitoring system deputy where the exclusiveness in the banking
financing constitutes a means of decreasing competition between banks (Diamond, 1984; Sharpe, 1990 and
Rajan 1992). In fact, the banking monitoring is a complicated activity which includes the follow-up of flows of
treasury in the company, the renewals of the appropriations(Nakamura, 1993). This explains the transmission
of the investors the responsibility for the control of cash flows from the company to the bank. On another side,
according to Mayer (1988) and Hellwig (1991), the financial intermediation represents in a certain way a
mechanism of commitment in a relation where the exclusiveness in the financing is a tool which can reduce the
costs of monitoring. Thus, it is deduced that the effectiveness of the banking intermediaries is increased within
the frame work of the exclusive relation.
Moreover, the contact with the bank makes it possible to ensure a strong probability of the success of the
financed project which is reflected on the increase in the performance of the company. In fact, the evaluation of
the quality of the customer is based on an individualized analysis whose force is determined by the
exclusiveness in the banking relation and the co-operation between the bank and the company (Morck and
Nakamura, 1999).
Through what was developed before, we have put emphasis on the importance of banking exclusiveness in the
financing in the companies as well as their performance. However, in what follows, we will present the
theoretical contributions which show the negative effect of this banki<Wq 1ng relation.
2.2. The negative effect of an exclusive banking relationship to the credit and the performance of a company
As we saw previously, the exclusive banking relationship leads to the creation of a climate of trust between the

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two sides. However, this confidence can be exploited by the bank and can thus disseminate the information
collected with a third party. Moreover, the bank can reduce its control.
Sometimes, the exclusive relation can be harmful. Indeed, as the exclusive relation requires the exchange of
information between the bank and its customer, there is a risk of revelation of private information to a
third party such as the suppliers, the customers or the competitors, whether accidentally or during the activities
of the bank council. According to Von Rheinbaben and Ruckes(2004), the probability of transmitting
information about a company can be increased if this bank maintains a relation with competitive companies.
Therefore, in the case of banking concentration, the probability that the companies are in relation to the same
bank is raised, which reduces their performance (Von Rheinbaben and Ruckes, 2004). The confidentiality of
information is then important in particular when it is of strategic nature. For this purpose, the contributions of
Diamond (1984) and Ramakrishnan and Thakor (1984) which support the optimality of the exclusiveness in the
banking relation were called into question following the negative consequences of this relation on the
performance of the company.
In addition, the exclusive banking relation can harm the quality of bank control. Indeed, the banking supervision
is started only if the bank estimates to optimize its profits following the financing of the company. In other
words, while having private information about the company, the bank will be strongly committed in the choice
of the projects to finance, the selection of horizons of investment and the choice of ways of financing
(Bellouma and Al , 2005). In this case, the company applies the action plan of its bank and does not seek to
maximize its own profit, which explains the negative effects on its performance.
On another side, a company of poor quality (bad reputation and companies having financial problems) may not
find it beneficial to inflict on itself a multiple banking supervision. Thus, it supports, the uniqueness of the
relation since the bank can be pushed to decrease its inspection and to reduce its techniques of monitoring
(Udell, 1989). In the same way, the companies tend to take more chances because they know in advance that
they will be financed in the case of financial problems. So the exclusive banking relation leads to a fraudulent
diversion of the funds granted instead of supporting the reproduction of the personal information, which
generates a cost of misuse of the credit and a degradation of the performance of the company1 (Berger and
Udell, 2002). Within the framework of the sub- section below, we will clarify the influence of the multiplicity
of the banking relation on the appropriations and the performance of the companies.
Following what was developed previously, it seems that the single banking relation is a relation for mitigated
effect. Indeed, it hypothesizes two contradictory results on the availability of the appropriations for the
companies.
However, the multiplicity of banking relations can also be explained starting from two theoretical debates. In
what follows, we will present the positive and negative effects of the multiple banking relations on the
appropriations and the performance of the companies.
2.3. Advantage of a multiple bank relationship on the availability for the credit and the performance of the
company
Certain banks choose to set up a relation with a company having already other banking contacts in order to
coordinate information on which loan- related decisions will be based (Japelli and Pagano , 2002). Moreover,
the abundance of relations supposes the spread of the risk supported by each bank, whose objective is to share
the insolvency of the company. Thus, the improvement of the efficiency of the granted appropriations involves
an improvement in the performance of company (Foglia and Al, 1998). Indeed, Padilla and Pagano (1997),
explain why the sharing information between the banks is advantageous.
Another point of view can be voiced to appreciate the benefits of the multiple banking relations. Formally, the
strategy of financing through a multiplicity of banking relations avoids the allocation of funds to non-profitable
projects. Indeed, as the costs of renegotiation of credit contracts of increase at the same time as the number of
banks, the opportunism of the managers decreases (Bolton and Scharfstein, 1996 and Carletti, 2004).
Some companies seek to have several banking relations in order to minimize the probability of the interruption
of financing (Mark, 2002 and Berger and Al, 2005). Thus, the multiple banking relations especially constitute an

The installation of a prudential regulation (Basle II) made it possible to minimize the imperfect behavious.
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insurance against the loss of their in formational flows revealed by the company when the banking system is
fragile2 (Brewerand Al, 2003 and Ongena and Al, 2003).
A study of Detragiache et al. (2001) proposes the possibility of not granting appropriations to the companies
having only one bank because of problems of unfavorable selection (Sharpe, 1990). Indeed, according to Thakor
(1996), the of good quality company may find it beneficial to weave several banks relations in order to limit the
risk of rationing of the credit. But, if the control carried out by only one bank is ineffective, the resorting to the
multiplicity of the banking relations presents a more advantageous solution. Moreover, Farinha and Santos
(2002) say that the diversification of the banking relations does not necessarily present an additional cost of
financing for the company because it is dependent on the cost of control supported by the bank and of the
facility of obtaining and data processing concerning the companies.
From this review of the theoretical literature, it seems that the resorting to a multiple banking relation banks
aims at avoiding the rupture of financing. However, this strategy presents following disadvantages.
2.4. Disadvantage of a multiple bank relationship for the credit and the performance of the companies:
Having several banking relations does have negative effects on the company. Indeed, the multiplicity of
banking relations minimizes the incentive of each bank to collect information and to control the company. In
addition, Petersen and Rajan (1995) preach that the multiple banking relations favour the appearance of a
mimetic behavior in the banks. Indeed, each one tries to decrease its effort of evaluation and to base its own
decision on that of the others (Rajan, 1992). Moreover, faced with multiple relations, banks can grant credits by
requiring high guarantees of carrying out their activities of control.
By widening its banking relations, the company then takes the chance to commit the banks without scruple as
regards assistance, advice and follow-up. Without control, the company is ready to refund a loan contracted at a
bank by another granted by a second one. In other words, the company can require appropriations higher than its
real need and use the additional funds in risky activities. This behavior decreases the feeling of its real risk and
damages its performance (Foglia and Al, 1998).
Moreover, the maintenance of several banking relations by the company is explainable by the refusal of the
initial bank to present the required funds to it (Harhoff and Krting, 1998). This idea was supported by Farinha
and Santos (2002) who show that companies at significant risk of credit borrow from several banks. Therefore,
this kind of banking strategy increases the probability of turning down loan applications presented by companies
(Childand Terence, 2005).
To recapitulate, the theoretical contributions presented, enable us to conclude that the impact of the exclusive
banking relation or its multiplicity on the appropriations and the performance of the companies is a doubleedged weapon. In order to carry out our own analysis, we will try to detect the nature of the link between these
dimensions within the following section.
3. SAMPLE, DATA AND METHODOLOGY
To prepare this study, we will make use of a sample of 394 Tunisian companies over the period 2001 - 2008.
For each company, we have the financial data drawn starting from assessments and result status. The data
related to the number of banking relations of each company were retrieved manually starting from the files of
appropriations.
Insert Table 1 Here
Our sample size includes 3152 firm-year observations with a predominance of industrial firms (49%) in
comparison to firms from the commercial sector (27%) and service sector (24%). Moreover, the service sector
includes firms in communication, transportation, tourism, etc. Once primarily based on agriculture, the Tunisian
economy has become more varied with important manufacturing and tourism sectors.
The definition of the explanatory variables will be presented in the table 1.
Insert Table 1 Here
2

In the case of monetary shocks, the banking system is obliged to lower the offer of credit. Thus, the hoped
profits of the exclusive banking relation decrease, which affects the costs of financing and reduces the activity
of the company.

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While being based on the various dependent variables quoted previously, the sample of the study shows the
characteristics of distribution summarized in Table 2.
Insert Table 2 Here
-

It average level of the appropriations of the companies with exclusive banking relation is about 7.493;
that of the companies having several banking relations is about 8.589. It varies between 0 and 11.171
for the companies with single banking relation and between 13.197 for those with multiple relations.
We notice that the average is closer to the maximum value of the appropriations, which enables us to
conclude that the Tunisian companies are not reticent when it comes to their credit policy. Moreover,
the standard deviation of this indicator appears most volatile of all the variables (3.101) and (2.395)
which implies that the appropriations of the company vary significantly within the sample.
As for the average level of the output of the credits of the companies with single banking relation, it is
higher compared to that of the companies with multiple relations, contrary to that of the stockholders'
equity. Indeed, the companies with multiple banking relations have more funds. Therefore, they have a
more important return on equity. To protect themselves, banks require credits as guarantees, which
decreases the output of their credits why appearing with those with exclusive banking relation.
The standard deviations of the performance are of (0.133 and 2.297) for the companies with exclusive
banking relation and of (0.109 and 1.037) for those with multiple relations. This leads us to note that
the distribution of the performance is more volatile inside the sample of the companies with exclusive
banking relation.

In order to examine the degree of correlation between the variables selected before, we determine the matrix of
correlation of the independent variables. This matrix is presented in table 3 above.
Insert Table 3 Here
To test for multicollinearity, we computed the variance inflation factor (VIF) for each variable. The results
showed that multicollinearity did not to seem to be a problem for the results. (The mean VIF is 1.84).
In order to determine the relation which exists between the availability of the credit, the performance of the
Tunisian companies and the number of banking relations, we choose the estimation econometric techniques on
data of panel which allows controlling the heterogeneity of the observations in their individual and temporal
dimensions (Baltagi, 2001 and Wooldridge, 2002).
To estimate this model, we used the estimation econometric techniques on data of incomplete panel. Moreover,
this method of estimation makes it possible to show if the observable individual effect for each company is
fixed or a random one. Indeed, the results of the estimation reveal that the consideration of the individual
specificity of the companies in the form of a random effect provides better results that are statistically significant
in comparison to a model for a fixed individual purpose.
It is a question of estimating the models, below:

CREDit it 1M it 2 sizeit 3 LIQit 4 Suppit 5TSit 6 LEVit 7 FIRit 8TVAit 9sit it (1)
ROAit 'it '1 M it '2 sizeit '3 LIQit '4 Suppit '5 TSit '6 LEVit '7 FIRit '8 TVAit '9 sit 'it (2)
ROEit ' it ' 1 M it ' 2 sizeit ' 3 LIQit ' 4 Suppit ' 5 TSit ' 6 LEVit ' 7 FIRit ' 8 TVAit ' 9 sit ' it (3)
Measure credit of the companies
CRED: it is a variable which measures the credit of the company. It is calculated by the logarithm of the
appropriations of the company brought back to its sales turnover.
Measure performance of the companies
In this literature, several definitions of the performance of the companies coexist. For Ettlinger and Tufford
(1996), the measurement of the performance is taken by the added-value achieved by the employee, whereas,
Majumdar (1997) uses the productivity calculated by the ratio of the added-value and the output. Other authors
measure the performance of the company by the growth amongst employees (Harhoff and Al, 1998 and Almus
and Nerlinger, 1999). Certain author, resort to the ratio Q of Tobin which brings back the value of market of
the credits to the cost of their replacement(Himmelberg and Al, 1999 and Zhou , 2001).

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All these measuring instruments are victims of criticism. Indeed, the ratio Q of Tobin is used exclusively to
locate the performance of the companies quoted on the stock exchange. In addition, the number of employees is
higher within the companies dependent on work than those using technology.
To find remedy to the disadvantages of these various measurements of the performance, we retain:
ROA: The percentage return on assets. It is obtained by the report of the net result the total credit (Fok and Al,
2004). It measures the economic profitability which makes it possible to have an idea on the degree of
performance of the companies in the course of their activity.
ROE: The return on equity also expressed as a percentage and measured by the ratio of the net result line
compared to the stockholders' equity (Degryse and Ongena, 2001). It reflects the financial profitability from the
point of view of the owners of the stockholders' equity.
Insert Table 4 Here
The results of our regression indicate a positive and significant correlation at the level of 1% between the
multiplicity of bank relationships (M) and the credit of firms. So, this positive correlation implies the beneficial
effect of the expansion of the banking pool on the funds of the Tunisian companies.
With the reform of banking in Tunisia, competition between the credit institutions developed. Consequently, the
Tunisian banks are moving towards the phenomenon of the multiple relations of their customers. In other words,
the choice of the multiple banking relationships by the company is justified by their desire to make it be
independent and to benefit from the advantages of competition between the banks.
The company which weaves several banking relationships benefits from an easier access to the funds and
ensures its supply (Chirinko and Elston, 2006). Thus, in accordance with our first assumption, the
multibancarity makes it possible to increase the desired means of financing of the company by distributing, its
flows of activities in an unequal way according to the clean specificities of its banks. This way, each bank has
only part of the credit granted to the company in question. As for the companies which choose the exclusive
banking relation, they are controlled by their principal bank which is extremely committed in its financing.
The rate of the added-value also has a positive and significant effect on the credit of the companies. However,
the leverage and the rate on equities prove to be correlated positively and in a non significant way.
The positive correlation between LTA and CRED can be explained by the fact of having multiple banking
contacts the firm must multiply its costs by the number of the banks that only the large companies can
support, while the small and medium-size companies remain impotent since they are supposed to be risky
(Shepherd ,2001).
Regarding the performance of the companies, we notice that the variable (M) is correlated negatively and
significantly with a level of 1% with the profitability of the credits. The negative correlation between the
relational variables and the profitability of the credits implies the disadvantage of the effect of the expansion of
the banking pool on the performance of the Tunisian companies.
Concretely, in a situation of multiple relations, the banks can grant appropriations credit by requiring important
guarantees. Moreover, it limits the incentive of each bank to gather information and to control the company.
Indeed, each one can be encouraged to decrease its effort of evaluation and to base its decision on that of the
others.Through this relational strategy, the company is likely to commit the non attentive banks in terms of
assistance, advice and follow-up. However, the company can require fresh money of its real need and use the
additional funds in risked activities, such as the case of refunding a loan contracted at a bank by another granted
by a second. As a result, this behavior decreases its performance. These results are converged with those found
by Farinha and Santos, (2002); Shepherd et al. (2005) who say that companies with weak performance or high
credit risk having to resort to the multiple banking relations. Moreover, the distribution of information between
the banks generally causes the risk of revealing information to a competitor, which destabilizes the banking
relationship, encourages an aggressive competition between the banks and thus, reduces consequently, the
performance of the company. Therefore, the quality company is more profitable when it selects banking
exclusiveness thanks to the neutralization of the effect of the revealed of information.
Therefore, the multiplicity of the banking relations allows the Tunisian companies of our sample to have more
bank credits, but it reduces their performances. This enables us to say that in order to become powerful; the

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company must make an optimal proportioning amongst banking relations, to choose those which are quite
attentive as regards assistance, advice and follow-up. And finally, they must use their financings in profitable
projects.
Another determinant of the performance of theTunisian companies is their size (Size). Indeed this variables is
correlated positively with ROA for the various selected explanations. The company size can be regarded as an
appreciation of the transparency of the company. In this direction, the problems of asymmetry of information
are limited to the level of high- sized companies through the economies of scale realized by the banks in the data
processing. Thus, the size reflects the capacity of the company to give reliable information about its financial
situation to its creditors and then one can appreciate the positive impact of the variable cuts on performance
(Fok and Al, 2004 and De Bodt and Al 2005).
Beyond the influence of these variables on the performance, we notice that the variable (FOUR) positively
influences the performance of the company on two levels. Indeed, the choice of the company to increase its debt
suppliers compared to its financial debts shows that it is rationed, which makes it possible for the company to be
powerful following the good management of its available resources and their use in profitable projects. In
addition, the more the firm is able to honor its current liabilities (LIQS), the higher the average time of the
regulation of the suppliers gets, to avoid the lack of funds due to a fast regulation and the important the more
economic profitability (ROA) . In the same context, the financially dependent company has a higher economic
profitability.
Concerning the variable of control, the results reveal that the service companies (SER) present a higher ROA
than that of the industrial and commercial companies. This report is explained by the rapid growth of the
services of business following the development Tunisia has reached.
CONCLUSION
On the basis of data relative to 394 Tunisian companies for the period of 2001-2008, this paper aims to analyse
the effect of the number of the bank relationships on the credit and performance of firms. We have used an
econometric model based on panel data analysis. The results of the regression indicate a positive and significant
correlation at a level of 1% between the multiplicity of bank relationships (M) and the firm credit. But, its a
negative and significant correlation at a level of 1% between (M) and the firm performance. This performance is
measured by the return on assets (ROA) and return on equity (ROE).
In other words, the Tunisian company seeks to increase the number of its relations to satisfy its financing needs.
However, the expansion of the banking pool decreases the performance of the Tunisian companies. This result
can be explained by the fact that banks grant credits by requiring important guarantees. Moreover, this relation
can limit the incentive of each bank to gather information and to control the company. Indeed, each one can be
encouraged to decrease its effort of evaluation and to base its decision on that of the others.
This choice of relational strategy, risks also engaging of the non attentive banks as regards the assistance, advice
and follow-up of the companies. Thus, they can ask for fresh money its real need and use the additional funds in
risky activities, which decrease their performances.
Therefore, the multiplicity of bank relationship allows the Tunisian companies of our sample to have more bank
credits. However, the profitability of their credits and that of the stockholders' equity is reduced. This enables us
to conclude that in order to become more powerful, the company must make an optimal proportioning amongst
banking relations and use its financings in profitable projects.
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TABLE(S)
Table 1: Definition of the explanatory variables
variables

Definition of the explanatory variables

The multiplicity of the relation is a variable dummy which takes 1 if the company is financed by two
banks or more and 0 elsewhere

The number of banking relations is an ordinalvariable which counts the number of the banks which
finance the company

Size

The firm size is measured as the natural logarithm of the book value of total assets.

LEV

Leverage is measured as the ratio of total debt to total assets.

Supp

The debts suppliers measured by the report of the debts suppliers on financial debt.

TVA

Rate of the added value. It is measured by the added-value of the company brought back to its sales
turnover.

LIQ

Liquidity is measured as the ratio of total assets total depts.

FIR

It is an indicator of the financial independence of the company. It is calculated by the stockholders' equity
on total liability

TS

The time suppliers represent the average time of regulation to the suppliers. If this time is short,
thetreasury of the company suffers from the lack offunds due to a fast regulation.

The business sector of the company is a variable of control in two modalities: IND it = 1 if the company
operates in the industrial sector and 0 somewhere else; COM it = 1 if the company operates in the
commercial sector and 0 somewhere else; SER it = 1 if the company operates in the service sector and 0
somewhere else (This modality is excluded from the regressions because it is considered as being the
reference modality)

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Available online at http://www.businessjournalz.org/efr

ISSN: 2047 - 0401

Table 2: Descriptive statistics

Variable

N
Mean Std Dev Minimum Maximum
Maximum

companies with multiple relations

CRED

634

7.493

3.101

ROA

634

0.057

0 .133 -0.892 0.794

ROE

634

0 .024 2.297

-51

Mean Std Dev Minimum

companies with single relations

11.171

8.231

2518

8.589

2.395

13.197

2518

0.038

0.109

-1.388

0.892

2518

0.101

1.037

-27.615

23.621

Table 3: Correlation coefficients of independent variables

TVA

FIR

TVA

TS

Size

LEV

Supp

LIQ

FIR

-0.1500*

TS 0.0380* 0.0465* 1
Size -0.0257 -0.0136 -0.0446*
LEV

0.0431* -0.0311* -0.0129 -0.0165

Supp 0.3481* -0.0338* -0.1174* -0.1353* 0.0283

LIQ -0.0969* 0.8389* 0.0721* -0.0492*-0.0328* 0.0312*

M

0.0089 - 0.0035 -0.0504* 0.1216* -0.0448* -0.0524* -0.0343*1

* denotes significance levels at 10%

Table 4: Result of estimate random effect of the (dependent variable (CRED), (ROA) and (ROE)
CRED

ROA

ROE

TVA

0.0044748
(3.90)***

-2.93e-06

-0.0002038

(-0.05)

(-0.35)

FIR

0.0222261

-0.00361

-0.007025

(1.30)

(-4.44)***

(-0.80)

-0.0008242

0.000107

0.0002001

(-1.59)

(4.35)***

(0.77)

.1920992
(0.47)

-0.0404915

-0.0085325

(1.87)*

(-0.06)

-0.0379411

-0.1107036

-(1.77)*

(-0.81)

-.050053

-0.1043338

-(2.24)**

(- 0.73)

0.004348

0.0135272

TS
COM
INDUS
SER
Size

0.3188886
(0.79)
-0.0494979
(-0.12)
0.3376596
(12.76)***

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Available online at http://www.businessjournalz.org/efr

LEV
Supp
M
LIQ
CONSTANT

ISSN: 2047 - 0401

0.0004763

(3.46)***

(0.97)

(0.21)

-0.0001004

-0.0578285

-3.394288

(- 0.94)

(-46.44)***

( -15.66)***

0.057747

0.5406705

(5.43)***

0.2690359
(2.81)***

(5.12)***

-0.0153975

-0.0099928

-.3074976

(-3.03)***

- (0.20)

(-7.66)***

-0.0001795

5.562112

(-0.00)

0.0130519
(0.66)

(10.69)***

0.0156255

0.0979797
(0.45)

(8.11)***
(0.41)
Wald chi2

605.90

174.79

2176.78

Signification

0.000

0.000

0.000

The t-statistics are in parentheses below estimated coefficients.

***, **, * denotes significance levels at 1%, 5% and 10%, respectively.

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