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

Abstract Purpose The increased number of nonperforming loans (NPLs) during COVID-19 pandemic has interrogated the robustness banks and stability whole banking segment. We examine impact credit risk (CR) on financial performance (FP) by comparing Islamic (IBs) to conventional (CBs). also investigate influence this association. Design/methodology/approach Our sample includes largest 200 across 15 countries from Middle East Africa (MEA) region over a four-year period (2018–2021). Panel ordinary least squares (OLS) with fixed random effects were used. Findings find negative association between NPLs FP for IBs CBs. reveal that is partially mediated in case separated CBs while not IBs. Originality evidence CR samples sector MEA been studied era as far we know. Research limitations/implications This study contributes knowledge crisis nexus provides information valued bankers, academics, managers regulators policy formulation.