**Table** **<u>3: Definition and sources of variables used in regression analysis</u>**

|Variable|Definition|Source|
|---|---|---|
|ROA|Return on average asset is the return generated from the assets financed by the bank.|Bankscope|
|ROE|Return on average equity is measure of the return on shareholder funds.|Bankscope|
|Net Interest Margin|This ratio is the net interest income expressed as a percentage of total assets.|Bankscope|
|Interest Income to Assets|Interest income on loans + other interest income + dividend income as a percentage of assets.|Bankscope|
|Interest Expenses to Assets|Interest expense on customer deposits+ other interest expense + preferred dividends paid & declared d as<br>apercentage of assets.|Bankscope|
|Total Securities to Assets|Loans and advances to banks + trading securities + derivatives + available for sale securities + held to<br>maturity securities + at-equity investments + other securities as a percentage of assets.|Bankscope|
|Overheads to Assets|Personnel expenses + other operating expenses as a percentage of assets.|Bankscope|
|Personnel Expenses to Assets|Wages, salaries, social security costs, pension costs and other staff costs, including expensing of staff<br>stock options as apercentage of assets.|Bankscope|
|Employment to Assets|Number of employees as a percentage of assets.|Bankscope and Union of Arab Banks Database|
|Wage|Personnel expenses (or overheads) as a percentage of employees.|Bankscope|
|Loan Loss Provisions to Gross Loans|Loan impairment charges as a percentage of gross loans.|Bankscope|
|Dummy Public Ownership|This is equal to 1 if bank is majority government owned.|Bankscope, Bankersalmanac, Union of Arab<br>Banks Database and banks’ websites.|
|Dummy Foreign Ownership|This is equal to 1 if bank is majority foreign owned.|Bankscope, Bankersalmanac, Union of Arab<br>Banks Database and banks’ websites.|
|Dummy Listed|This is equal to 1 if bank is listed on a stock market.|Bankscope, Bloomberg and websites of<br>national stock markets.|
|Lag Total Assets (Log)|One period lag of total earning assets + cash and due from banks + foreclosed real estate + fixed assets +<br>goodwill + other intangibles + current tax assets + deferred tax + discontinued operations + other assets.|Bankscope|
|Non-Interest Income to Assets|Net gains (losses) on trading & derivatives + net gains (losses) on other securities + net gains (losses) on<br>assets at FV through income statement + net insurance income + net fees and commissions + other<br>operating income as a percentage of assets.|Bankscope|
|Deposits to Assets|Total customer deposits + deposits from banks + Other deposits and short-term borrowings as a<br>percentage of assets.|Bankscope|
|Loans to Assets|Residential mortgage loans + other mortgage loans + other consumer/retail loans + corporate &<br>commercial loans + other loans - reserve against possible losses on impaired or non performing loans as<br>apercentage of assets.|Bankscope|
|Asset Share of State Banks|Share of state ownership in the banking sector.|Bankscope, Bankersalmanac, Union of Arab<br>Banks Database and banks’websites.|
|Log GDP per capita|Logarithm of GDP per capita.|<br>World Bank’s World Development Indicators|
|Urban<br>Population<br>%<br>of<br>Total|Share ofpopulation in the urban areas to totalpopulation in a country.|World Bank’s World Development Indicators|
|Branches per 100,000 Adults|Number of branches of commercial banks per capita.|IMF|
|Deposit Accounts per 1,000 Adults|Number of deposit accounts with commercial banks per capita.|IMF|

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