the variations in bank profitability are largely attributable to variations in loan loss provisions. We use the loan loss provisions to loans (LLP) ratio to proxy for the credit risk that characterizes the loan portfolio. The theory suggests that increased
exposure to credit risk is normally associated with decreased firm profitability. This result may be justified by taking into account the fact that the more financial institutions are exposed to high-risk loans, the higher the accumulation of unpaid loans, implying that these loan losses have produced decreased returns for many banks (Miller and Noulas 1997)  (Panagiotis et al, 2007)