Table 2 Definition and measurement of variables
From: Factors influencing commercial bank profitability in Bangladesh: a panel data approach
Variable | Acronym | Measure | Expected effect | Empirical evidence |
|---|---|---|---|---|
Dependent variable | Â | Â | Â | Â |
Bank profitability | ROA | ROA = \(\frac{{{\text{Net profit}}_{it} }}{{{\text{Total asset}}_{it} }}\) |  | |
Independent variable: bank-specific factors | Â | Â | Â | Â |
Capital adequacy | CAD | CAD = \(\frac{{{\text{Equity}}_{it} }}{{{\text{Total asset}}_{it} }}\) | + | |
Branches | BRNCH | Number of branches | + | [17] |
Asset management | AM | AM = \(\frac{{{\text{Operating income}}_{it} }}{{{\text{Total asset}}_{it} }}\) | + | [122] |
Deposit | DEP | DEP = \(\frac{{{\text{Deposits}}_{it} }}{{{\text{Total asset}}_{it} }}\) | − | |
Asset quality | AQ | AQ = \(\frac{{{\text{Loan}}_{it} }}{{{\text{Total asset}}_{it} }}\) | − | |
Independent variable: macroeconomic factors | Â | Â | Â | Â |
Economic activity | GDP | Annual real GDP growth rate | ± | |
Inflation | IF | Annual inflation rate (IF) | ± | |
Exchange rate | EXR | Average exchange rate in a year | + | |
Stock traded | ST | Stocks traded, turnover ratio of domestic shares (%)—Bangladesh | + |