Variable

Corresponding determinant

Measure

Hypothesis

Expected effect

Asset Quality

Non-performing loan ratio

$\text{NPL}=\frac{\text{Non-PerformingLoans}}{\text{GrossLoans}}$

N/A

N/A

Capital Adequacy

Capital adequacy ratio

$\text{RWA}=\frac{\text{OwnedCapital}}{\text{Risk-WeightedAssets}}$

H1: “Moral hazard” Hypothesis

(−)

Management Efficiency

Cost efficiency (Expenditure income ratio)

$\text{EIR}=\frac{\text{TotalOperatingExpenses}}{\text{OpertingIncome}}$

H2: “Bad Management I” Hypothesis

(+)

Earnings

Profitability (Return on Equity)

$\text{ROE}=\frac{\text{Netimcome}}{\text{TotalEquity}}$

H3: “Bad Management II” Hypothesis

(−)

Liquidity

Liquidity ratio

$\text{LR}=\frac{\text{CurrentAssets}}{\text{CurrentLiabilities}}$

H4: “Debt rollover” Hypothesis

(−)

Exchange rate

Local currency (HTG) units per U.S. dollar

EXR = Local currency (HTG) units per U.S. dollar

H5: “Exchange rate hypothesis”

(+)