Variable | Definition | Notation | Expected sign | Reference |
Dependent Variable |
|
| ||
Return on Assets | Bank profit before tax divided by the total assets | roa | −/+ | [2] [8] |
Independent variables |
|
| ||
7 Day Interbank Rate | Weighted Average Rate at which banks borrow in the interbank market | ibr | + | [5] [21] |
91 Day Treasury Bill Rate | Weighted Average Rate for treasury Bills of 91 days tenor. | tb | + | [2] [20] |
Money supply | Money supply M2 (base money + shilling deposits) | ms | − | [52] [53] |
Lending Rate | Weighted Average rate for bank loans. | lr | + | [27] [28] |
Core Inflation | Percentage change in CPI | coreinf | − | [16] [8] |
Control Variables |
|
|
| |
Total Assets | Total assets of each bank in the sample. | ta | + | [8] [16] [60] |
Capital/Assets ratio | Total capital as a share of assets of each bank in the sample. | capitalr | + | [15] [61] |
Total Loans | Total loans of each bank in the sample. | loans | + | [15] [62] |
Total Securities | Total government securities held by each bank in the sample. | securities | + | [20] [2] |