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]