Do Financial Indicators Affect the ‎Performance of the ‎Banking Ecosystem of Bahrain? A Study of Covid-19 ‎Unprecedented

The main objective of this study is to address the growth of the banking system in Bahrain and analyze the impact of Covid-19 on its financial performance due to the global pandemic effect. The sample has been taken from the banking sectors of Bahrain, which include three clusters: Islamic banking, conventional banking, and entire banks. Data were collected from the Central Bank of Bahrain (CBB), with quarterly data extracted from 2019-2020. This paper measures the impact of pre- and post-Covid-19 financial performance of Bahraini banks to determine the factors affecting the financial indicators that influence the banking sectors of Bahraini banks. The outcomes of the t-statistic failed to reject the null hypothesis, indicating no significant difference between the pre- and post-financial performance of the complete banking sectors of Bahrain. Furthermore, the study diagnoses the factors analysis, including capital adequacy, asset quality, profitability, and liquidity of the banking system of Bahrain. Islamic banking maintained a strong financial position in the pre- and post-Covid-19 periods, along with capital adequacy, asset quality, and profitability. It was observed that pre-Covid-19 conventional banks performed below par in terms of capital adequacy, asset quality, and liquidity, but post-Covid-19, the profitability ratio improved. The entire banking sector, before Covid-19, worked under pressure to generate profit, but after the coronavirus crisis, it recorded profits due to timely actions taken by the Government of Bahrain to reduce the adverse impact of Covid-19. This is a time of survival and growth for the banking industry during uncertainty, aiming to facilitate knowledge-driven insights for financial success.