Table 1 Definitions of variables, hypotheses and expectation.
Variables & Symbol | Variables definitions | Hypotheses & Expected Sign |
|---|---|---|
Financial performance (ROA) | This is equal to net operating income minus income taxes divided by average total assets | |
Cash and cash equivalent (A1) | It includes cash on hand, bank balance and deposits, money market investment, and other liquid instruments | Positive (H1) |
Net loan portfolio (A2) | This is equal to loan portfolio minus (impairment loss allowance + unearned income and discount) | Positive (H2) |
Net fixed asset (A3) | The long-term tangible assets (usually more than one period) uses in the production or supply of goods or services or for administrative purposes. Further, it is net of accumulated depreciation | Positive (H3) |
Other assets (A4) | It includes trade and other receivables, current and deferred tax assets, and inventories | Positive (H4) |
Deposits (L1) | The sum of money deposited in an account with a financial institution that are payable to the account holder. It includes current accounts, term accounts, interest bearing accounts, and E-money accounts | Negative (H5) |
Borrowings (L2) | The main balance for all loans received though debt instruments. It can include bonds or other debt securities issued | Negative (H6) |
Other liabilities (L3) | It includes trade and other payables, financial liabilities at fair value, provision for employee benefits, other provisions, current and deferred income tax liabilities, and deferred revenue | Negative (H7) |
Other short-term financial liabilities (L4) | It include overdrafts or other short-term financing arrangements, usually less than one year | Negative (H8) |
MFI’s size (LogTA) | Natural logarithms of total assets | Positive (H9) |
GNICP | GNI per capita growth (annual %) | Negative (H10) |
Inflation (INF) | Consumer prices (annual %) | Negative (H11) |