Table 5 Definitions of variables
From: Size, efficiency, market power, and economies of scale in the African banking sector
Variables | Signs | Definitions of variables | Sources |
|---|---|---|---|
Marginal Cost | MC | The change in Total cost arising from a change in Output by one unit. | Translog Cost Function |
Price (charged on Output) | P | (Gross Interest and Dividend income +Total Non-Interest Operating Income)/Output | BankScope |
Lerner Index | Lerner | Firm’s market power ((P-MC)/P) | Authors’ calculation |
Cost | C | Total Operating Cost (Overheads) | BankScope |
Output | Q | Loans | BankScope |
Deposit Price | W1 | Total Interest Expense/Total Deposits, Money Market and Short-term Funding | BankScope |
Labour Price | W2 | Personnel Expenses on Total Assets | BankScope |
Capital Price | W3 | Other Operating Expenses on Fixed Assets | BankScope |
GDP per capita | GDPpcg | GDP per capita growth (annual %) | WDI (World Bank) |
Inflation | Infl. | Consumer Price Index (annual %) | WDI (World Bank) |
Populaton density | Popden | People per square kilometers of land area | WDI (World Bank) |
Loans/Assets | L/A | Loans on Total Assets | BankScope |
Deposits/Assets | D/A | Deposits on Total Assets | BankScope |
Bank Branches | B. Brchs | Number of Bank Branches (Commercial bank branches per 100,000 adults) | BankScope |
Interest Rate Margin | IRM | Difference between ‘Interest Income on Loans/Average Gross Loans’ and ‘Interest Expense on Customer Deposits/Average Customer Deposit’ | BankScope |
Bank Size | BkSize | Ratio of Bank Assets to Total Assets (Assets in all Banks for a given period) | BankScope |
Economies of Scale | ES | Sum of derivatives of the Cost function with respect to Output. | Authors’ calculation |