Table 6 Description of variables used
From: Do competition and efficiency lead to bank stability? Evidence from Bangladesh
Variables | Description/measurement | Source |
|---|---|---|
Dependent variable | ||
Financial stability | \(\log(Z{\text{-score}})=\log \left( {\frac{{\left( {{\mathrm{ROA + }}\frac{\mathrm{Equity}}{\mathrm{Assets}}} \right)}}{{\sigma {\mathrm{ROA}}}}} \right)\) | Author’s calculation |
Volatility of ROA = σROA | Author’s calculation | |
Nonperforming loan ratio (NPL) | Financial statement | |
Independent variables | ||
Competition | Boone indicator = \(\ln ({\mathrm{Market}}\;{\mathrm{share}})_{\mathrm{it}} = \alpha + \beta \ln ({\mathrm{Marginal}}\;{\mathrm{cost}})_{\mathrm{it}}\) | Author’s calculation |
Efficiency | Efficiency index = PCA of net interest margin, working capital ratio, asset turnover ratio and operating efficiency ratio | Author’s calculation |
Operating efficiency ratio | Author’s calculation | |
Control variables | ||
Bank size | log(total asset) | Financial statement |
Liquidity | Loan-to-deposit ratio | Author’s calculation |
Economic growth | Growth of GDP | WDI, WB |
Economic condition | log(GDP) | WDI, WB |
log(GDP per capita) | WDI, WB | |
Financial depth | Broad money to GDP | WDI, WB |
Governance | Composite governance index = PCA of six governance indicators | WGI, WB |
Regulation | Regulation indicator of economic freedom index | Fraser institute |