Table 10 Impact of monetary policy on...

Table 10

Impact of monetary policy on ROA and ROE across bank groups

Variable	ROA			ROE
	Public	Private	Foreign	Public	Private	Foreign
Credit-deposit ratio (CDR)	−0.001	−0.001	−0.001	−0.001	−0.001^*	−0.001
Credit-deposit ratio (CDR)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)
Ratio of deposits to total liabilities (RD)	−0.001	−0.001^*	−0.001	−0.003	0.001	−0.001
Ratio of deposits to total liabilities (RD)	(0.00)	(0.00)	(0.00)	(0.01)	(0.00)	(0.01)
Ratio of priority sector advances to total advances (PSR)	0.001	−0.001^**	0.001	0.001	−0.001	−0.001
Ratio of priority sector advances to total advances (PSR)	(0.00)	(0.00)	(0.00)	(0.01)	(0.00)	(0.01)
Capital adequacy ratio (CAR)	0.001	0.001^*	−0.002	0.003^*	0.001	−0.03^**
Capital adequacy ratio (CAR)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.01)
Ratio of non-interest income to total assets (NITA)	−0.01^***	−0.001^***	0.13^***	−0.24^**	−0.00	0.35^***
Ratio of non-interest income to total assets (NITA)	(0.01)	(0.00)	(0.02)	0.10	(0.00)	(0.12)
Ratio of intermediation cost to total assets (OICTA)	0.01	−0.001	−0.07^***	0.05	−0.01^**	−0.19^***
Ratio of intermediation cost to total assets (OICTA)	(0.00)	(0.00)	(0.01)	(0.07)	(0.00)	(0.05)
Ratio of operating profits to total assets (OPPTA)	0.01^***	0.001^***	0.09^***	0.22^***	−0.00	0.30^***
Ratio of operating profits to total assets (OPPTA)	(0.00)	(0.00)	(0.02)	(0.08)	(0.00)	(0.08)
Gross domestic product growth (GDPGR)	0.001	−0.001^***	−0.001	−0.02	0.001^**	−0.01^**
Gross domestic product growth (GDPGR)	(0.00)	(0.00)	(0.00)	(0.02)	(0.00)	(0.00)
Inflation (INFL)	0.001^***	−0.001	−0.001	0.05^***	0.001^***	−0.001
Inflation (INFL)	(0.00)	(0.00)	(0.00)	(0.01)	(0.00)	(0.01)
Cash reserve ratio (CRR)	0.02^***	−0.001^***	−0.01^***	0.21^***	−0.00	−0.02^*
Cash reserve ratio (CRR)	(0.00)	(0.00)	(0.00)	(0.03)	(0.00)	(0.01)
Statutory reserve ratio (SLR)	0.01^***	−0.001^***	0.001	0.12^***	0.001^**	0.02^**
Statutory reserve ratio (SLR)	(0.00)	(0.00)	(0.00)	(0.02)	(0.00)	(0.01)
Repo rate (RR)	0.001^***	0.001^*	0.001^**	0.04^**	−0.001	−0.001
Repo rate (RR)	(0.00)	(0.00)	(0.00)	(0.02)	(0.00)	(0.01)
Bank rate (BR)	0.001^***	−0.001	−0.001^**	0.05^***	0.001	0.001
Bank rate (BR)	(0.00)	(0.00)	(0.00)	(0.01)	(0.00)	(0.01)
Treasury bill rate (TBR)	−0.00^**	−0.001^**	0.01^***	−0.07^***	0.001^***	0.01^*
Treasury bill rate (TBR)	(0.00)	(0.00)	(0.00)	(0.03)	(0.00)	(0.01)
Intercept	0.22^***	0.35^***	0.42^*	1.76^***	4.06^***	2.15^***
Intercept	(0.03)	(0.01)	(0.24)	(0.67)	(0.03)	(0.56)
R-squared	0.91	0.97	0.89	0.91	0.97	0.91
Adj R-squared	0.89	0.97	0.87	0.89	0.97	0.90
D-W stat	0.82	1.01	1.52	0.82	1.04	1.75
Fixed effects	Yes	Yes	Yes	Yes	Yes	Yes
Cross sections	65	65	65	65	65	65
Observations	715	715	715	715	715	715

Variable	ROA			ROE
	Public	Private	Foreign	Public	Private	Foreign
Credit-deposit ratio (CDR)	−0.001	−0.001	−0.001	−0.001	−0.001^*	−0.001
Credit-deposit ratio (CDR)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)
Ratio of deposits to total liabilities (RD)	−0.001	−0.001^*	−0.001	−0.003	0.001	−0.001
Ratio of deposits to total liabilities (RD)	(0.00)	(0.00)	(0.00)	(0.01)	(0.00)	(0.01)
Ratio of priority sector advances to total advances (PSR)	0.001	−0.001^**	0.001	0.001	−0.001	−0.001
Ratio of priority sector advances to total advances (PSR)	(0.00)	(0.00)	(0.00)	(0.01)	(0.00)	(0.01)
Capital adequacy ratio (CAR)	0.001	0.001^*	−0.002	0.003^*	0.001	−0.03^**
Capital adequacy ratio (CAR)	(0.00)	(0.00)	(0.00)	(0.00)	(0.00)	(0.01)
Ratio of non-interest income to total assets (NITA)	−0.01^***	−0.001^***	0.13^***	−0.24^**	−0.00	0.35^***
Ratio of non-interest income to total assets (NITA)	(0.01)	(0.00)	(0.02)	0.10	(0.00)	(0.12)
Ratio of intermediation cost to total assets (OICTA)	0.01	−0.001	−0.07^***	0.05	−0.01^**	−0.19^***
Ratio of intermediation cost to total assets (OICTA)	(0.00)	(0.00)	(0.01)	(0.07)	(0.00)	(0.05)
Ratio of operating profits to total assets (OPPTA)	0.01^***	0.001^***	0.09^***	0.22^***	−0.00	0.30^***
Ratio of operating profits to total assets (OPPTA)	(0.00)	(0.00)	(0.02)	(0.08)	(0.00)	(0.08)
Gross domestic product growth (GDPGR)	0.001	−0.001^***	−0.001	−0.02	0.001^**	−0.01^**
Gross domestic product growth (GDPGR)	(0.00)	(0.00)	(0.00)	(0.02)	(0.00)	(0.00)
Inflation (INFL)	0.001^***	−0.001	−0.001	0.05^***	0.001^***	−0.001
Inflation (INFL)	(0.00)	(0.00)	(0.00)	(0.01)	(0.00)	(0.01)
Cash reserve ratio (CRR)	0.02^***	−0.001^***	−0.01^***	0.21^***	−0.00	−0.02^*
Cash reserve ratio (CRR)	(0.00)	(0.00)	(0.00)	(0.03)	(0.00)	(0.01)
Statutory reserve ratio (SLR)	0.01^***	−0.001^***	0.001	0.12^***	0.001^**	0.02^**
Statutory reserve ratio (SLR)	(0.00)	(0.00)	(0.00)	(0.02)	(0.00)	(0.01)
Repo rate (RR)	0.001^***	0.001^*	0.001^**	0.04^**	−0.001	−0.001
Repo rate (RR)	(0.00)	(0.00)	(0.00)	(0.02)	(0.00)	(0.01)
Bank rate (BR)	0.001^***	−0.001	−0.001^**	0.05^***	0.001	0.001
Bank rate (BR)	(0.00)	(0.00)	(0.00)	(0.01)	(0.00)	(0.01)
Treasury bill rate (TBR)	−0.00^**	−0.001^**	0.01^***	−0.07^***	0.001^***	0.01^*
Treasury bill rate (TBR)	(0.00)	(0.00)	(0.00)	(0.03)	(0.00)	(0.01)
Intercept	0.22^***	0.35^***	0.42^*	1.76^***	4.06^***	2.15^***
Intercept	(0.03)	(0.01)	(0.24)	(0.67)	(0.03)	(0.56)
R-squared	0.91	0.97	0.89	0.91	0.97	0.91
Adj R-squared	0.89	0.97	0.87	0.89	0.97	0.90
D-W stat	0.82	1.01	1.52	0.82	1.04	1.75
Fixed effects	Yes	Yes	Yes	Yes	Yes	Yes
Cross sections	65	65	65	65	65	65
Observations	715	715	715	715	715	715

Note(s): We report the results of the linear models using the bank groups’ ROA and ROE, based on ownership structures, as the dependent variables. We present the results of the Panel Least Squares (PLS) with fixed effects (cross-section weights (PCSE) standard errors and covariance) with the coefficient values marked with significance levels in the first row, followed by the standard errors (in parenthesis) in the second row. Asterisks ^***, ^** and ^* indicate significance levels at 1, 5 and 10%, respectively

Source(s): Authors’ own calculations

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