The Official Journal of the Pan-Pacific Association of Input-Output Studies (PAPAIOS)
Table 1 Variables’ descriptions
Variables | Definitions | Sources |
|---|---|---|
Dependent variable | ||
Earnings volatility | The standard deviation of the commercial banks' pre‐tax income to yearly averaged total assets, calculated over 3‐year overlapping periods [σ(ROA)] | The author’s calculation is based on the World Bank |
Explanatory variable | ||
Banking-sector specific variables | ||
Capital regulation | Bank regulatory capital to risk-weighted assets (RQ/RA) | World Bank |
Credit risk | Bank non-performing loans to gross loans (NPL/GL) | World Bank |
Inefficiency | Bank cost to income ratio (C/I) | World Bank |
Market power | Lerner index (LI) | World Bank |
Income divarication | Bank noninterest income to total income (NI/TI) | World Bank |
Country-level variables | ||
Financial development | Domestic credit provided by banking sector to GDP (DC) | World Bank |
Deposit insurance | It equals 1 if a country has implemented explicit deposit insurance (DI) | IMF |
Political risk | The political risk index includes government stability, socioeconomic conditions, investment profile, internal conflict, external conflict, corruption, military in politics, religious tensions, law and order, ethnic tensions, democratic accountability, and bureaucracy quality. A higher score indicates a lower political risk (PRI) | |
Economic risk | The economic risk index includes the GDP per head, real GDP growth, annual inflation rate, budget balance (% GDP), and current account (% GDP). A higher score indicates a lower economic risk (ERI) | |