| Dependent Variables |
| Financial Performance and Stability |
| Net Interest Margin | NIM | The NIM is set by banks to cover all the risks and costs of intermediation (Marinković and Radović, 2014). Adequate NIM should generate sufficient income to increase the capital base as risk exposure increases (Angbazo, 1997). NIM is the ratio of net interest income to total income | Financial performance | |
| Risk-Adjusted Return on Assets | RAROA | The study computes one risk-adjusted performance measure of return on assets by dividing ROA by its standard deviation (σ) (see also Sissy et al., 2017; Amidu and Wolfe, 2013b) | Financial performance | |
| Insolvency Risk | Z-SCORE | The study employs the Z-SCORE (see Sissy et al., 2017; Alhassan and Biekpe, 2016; Demirguc-Kunt and Huizinga, 2010) which signifies a universal measure of bank risk. It measures the number of standard deviations that the bank's rate of return should fall to drive it into insolvency ((ROA + Equity)/ϭROA). The Z-SCORE thus reflects the firm’s buffer in equity and profits with the standard deviations of profits (Alhassan and Biekpe, 2016). Hence, a higher value indicates a high distance to default and consequently high solvency and vice versa | Financial Stability | |
| Independent and Control Variables |
| Board Size | BODSIZE | It is the number of directors who serve on the board (Zahra and Pearce, 1989). It is measured by the total number of directors on the board of a bank | Good Corporate Governance | + |
| Board Independence/Composition | BODIND | Board independence is measured as the proportion of independent non-executive directors on the board; that is the number of independent non-executive directors to the total number of directors on the board (see also Duru et.al., 2016) | Good Corporate Governance | + |
| Board Diversity | BODGEN | Board diversity is measured as the proportion of directors on the board; that is the number of female directors to the total number of directors on the board (see Duru et al., 2016; Gul et al., 2011) | Good corporate Governance | +/– |
| Bank Size | BSIZE | Size is measured as a natural logarithm of the bank’s fiscal year-end total assets (Al-Ghanem and Hegazy, 2011; Che-Ahmad and Abidin, 2009) | Size | + |
| Banking Market Structure | CLR5 | In line with Alhassan and Asare (2016) and Al-Musalli and Ismail (2012), this study employs the CLR5 (5-bank loan concentration ratio) to measure banks' lending concentration. The ratio of the total loan assets of the five largest banks to total industry loan assets. It deals with the concentration of lending amongst banking firms for loan customers | Market Concentration | + |
| Gross Domestic Product per capita growth rate | GDP | GDP is incorporated as justification for differences in the macroeconomic environments of the countries (Sissy et al., 2017; Amidu and Wilson, 2014; Amidu and Wolfe, 2013a). GDP is used to control for general economic growth and development, macroeconomic stability that somehow affect the performance and stability of banks in a country. GDP is measured as the annual rate of growth in GDP per capita | Macroeconomic Stability | + |