Mebratu-B-PLC theory implication on developing country’s oxygen of bank

Figures & data

Table 1. List of sampled non-public commercial banks

No	Name of banks	Bank Address	License Date G.C.	Sector
1	Awash international Bank	Ethiopia	1994	Banking
2	Dashen Bank	Ethiopia	1995	Banking
3	Bank of Abyssinia	Ethiopia	1996	Banking
4	Wegagen Bank	Ethiopia	1997	Banking
5	United Bank	Ethiopia	1998	Banking
6	Nib International Bank	Ethiopia	1999	Banking
7	Cooperative Bank of Oromia	Ethiopia	2004	Banking
8	Lion International Bank	Ethiopia	2006	Banking
9	Zemen Bank	Ethiopia	2006	Banking
10	Oromia International Bank	Ethiopia	2008	Banking

(Source: National Bank of Ethiopia report, 2021)

Table 2. Description of the variables, their expected relationship and Sign

Variable	Symbol	Measurement	Expected Sign
Deposit Growth rate	logDGR	The logarithm form deposit growth rate of bank n at time t
Branch expansion rate	BR	Percentage change of branch for bank n at time T	+
Deposit Interest Rate	IR	Minimum deposit interest rate set by national bank of Ethiopia at time t	+
RGDP growth rate	GDP	The percentage change of real growth domestic product of Ethiopia	+
Customer growth rate	CGR	Percentage Change in customer of bank n at time T	+
Life expectancy rate	LER	The country’s life expectancy rate at time T	+
Profitability	RE	Return on equity of bank nt	+
Capital adequacy	Cap	The ratio of capital of bank ti to loan and advance of bank ti	-

(Source: author own formulation)

Table 3. Summary of descriptive statistics of variables

	DGR	BR	CGR	GDP	IR	LER	RE	CAP
Mean	0.312	0.255	0.286	0.093	0.056	0.009	0.225	0.298
Median	0.269	0.232	0.227	0.094	0.050	0.008	0.219	0.275
Maximum	0.859	0.760	2.209	0.114	0.070	0.016	0.424	0.581
Minimum	0.052	0.024	0.000113	0.077	0.050	0.005	−0.141	0.149
Std. Dev.	0.173	0.143	0.264	0.011	0.009	0.003	0.082	0.091

(Source: author own formulation)

Figure 1. Normality test for residuals.

Table 4. Heteroscedasticity Test

Heteroscedasticity Test: Breusch-Pagan-Godfrey
F-statistic	1.817	Prob. F (7,92)	0.093
Obs*R-squared	12. 146	Prob. Chi-Square (7)	0.095
Scaled explained SS	12. 674	Prob. Chi-Square (7)	0.080

(Source: author own formulation)

Table 5. Multicollinearity test

Variable	VIF	1/VIF
LER	2.58	0.387
IR	2.45	0.408
GDP	1.73	0.578
CAP	1.67	0.600
RE	1.30	0.767
BR	1.18	0.846
CGR	1.13	0.886
Mean VIF | 1.72

(Source: Author own formulation)

Table 6. Ramsey Reset Test

Ramsey RESET Test
	Value	Df	Probability
t-statistic	0.533	91	0.594
F-statistic	0.284	(1, 91)	0.594
Likelihood ratio	0.312	1	0.576

(Source: Author own formulation)

Table 7. Breusch-Godfrey Serial Correlation LM Test

Breusch-Godfrey Serial Correlation LM Test:
F-statistic	2.483	Prob. F (1,91)	0.118
Obs*R-squared	2.656	Prob. Chi-Square (1)	0.103

(Source: author own formulation)

Table 8. Correlation matrix

Correlation Analysis: Ordinary
Correlation	LOGDGR	BR	CGR	IR	LER	GDP	CAP	RE
LOGDGR	1
BR	0.168	1
CGR	0.558	0.050	1
IR	0.253	−0.250	0.055	1
LER	0.033	−0.012	0.040	−0.676	1
GDP	−0.238	0.080	0.020	−0.587	0.585	1
CAP	−0.087	0.194	0.098	−0.491	0.504	0.348	1
RE	0.014	−0.076	−0.294	−0.098	0.162	−0.005	−0.214	1

(Source: author own formulation)

Table 9. Unit root test

Variable	Method	Unit root at	Statistic	Prob.**
Logdgr	Levin, Lin & Chu t*	Level	−4.312	0.000
Cgr	Levin, Lin & Chu t*	Level	−4.461	0.000
Gdp	Levin, Lin & Chu t*	Level	−10.60	0.000
Ler	Levin, Lin & Chu t*	Level	−4.946	0.000
Re	Levin, Lin & Chu t*	Level	−2.200	0.013
CAP	Levin, Lin & Chu t*	1st difference	−11.96	0.000
Br	Levin, Lin & Chu t*	Level	−6.005	0.000
Ir	Levin, Lin & Chu t*	2^nd difference	−4.755	0.000

(Source: author own formulation)

Table 10. Panel least square regression analysis

Variable	Coefficient	Std. Error	t-Statistic	Prob.
C	−1.276	0.342	−3.723	0.0003
BR	0.477	0.133	3.567	0.0006
CGR	0.795	0.107	7.390	0.0000
IR	9.976	3.074	3.244	0.0016
LER	23.106	7.926	2.915	0.0045
GDP	−4.932	2.065	−2.388	0.0190
CAP	−0.203	0.258	−0.787	0.4333
RE	0.510	0.251	2.031	0.0451
R-squared	0.512	Mean dependent var		−0.570
Adjusted R-squared	0.475	S.D. dependent var		0.248
S.E. of regression	0.180	Akaike info criterion		−0.514
Sum squared resid	2.982	Schwarz criterion		−0.306
Log likelihood	33.723	Hannan-Quinn criter.		−0.430
F-statistic	13.805	Durbin-Watson stat		1.497
Prob(F-statistic)	0.000

(Source: author own formulation)

NBE. (2021). National bank of Ethiopia annual report.

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