Table 10 Variable definitions
From: Bank efficiency in Middle East and North African countries: Does political connection type matter?
Variables | Notation | Description |
|---|---|---|
Dependent variables | ||
Cost efficiency | CE | The cost efficiency score is determined by solving Eq. (2) |
Technical efficiency | TE | The technical efficiency score is determined by solving Eq. (1) |
Allocative efficiency | AE | The allocative efficiency score is calculated by solving Eq. (3) |
Independent variables | ||
Aggregate political connections | A_PC | A dummy variable that takes one if the bank is politically connected through the CEO and/or the board of directors |
CEO political connections | CEO_PC | A dummy variable that takes one if the CEO is politically connected |
Board of directors’ political connections | BD_PC | A dummy variable that takes one if the board of directors (except when the CEO is the chairman) is politically connected |
Control variables | ||
Bank-Specific variables | ||
Bank size | SIZE | The natural logarithm of total assets |
Bank capital adequacy | CAR | Total equity to total assets ratio |
Credit risk | CRD_RQ | The ratio of nonperforming loans to total assets |
Bank profitability | PROF | Net income to total assets |
Industry-specific variables | ||
Banking sector concentration | BAN_CON | The proportion of total commercial banking assets controlled by the five biggest commercial banks in a country |
Banking sector development | DOM_CR | Domestic credit to the private sector divided by GDP |
Country-Specific variable | ||
Economic growth | GDP_GR | The annual growth rate of GDP |
Inflation rate | INF | Annual inflation rate |
Political risk | POL_RISK | An index including government stability, socioeconomic conditions, investment profile, internal conflict, external conflict, corruption, military in politics, religious tensions, law and order, ethnic tensions, democratic accountability, and bureaucratic quality |
World policy uncertainty index | WEPU | The economic index of uncertainty is measured by the frequency of the word “uncertainty” in the Economist Intelligence Unit’s country reports |
Pandemic period | PAND_CRIS | A dummy variable that takes one if the observation is from 2020 or 2021 and 0 otherwise |