Table 3.
Variable definitions and measures.
| Variables | Definition and measure |
|---|---|
| Bank performance | |
| ROA | Return on assets is calculated by dividing a bank's net income by total assets |
| ROE | Return on equity is calculated by dividing a bank's net income by total equity |
| Bank risk | |
| Zscore | Insolvency risk is computed as the sum of the current period return on assets. (ROA) and the equity ratio (equity over total assets) divided by the standard deviation of ROA |
| NPLS | Credit risk is measured by the ratio of non-performing loan on total loan |
| DROA | Operational risk is measured by the standard deviation of ROA |
| Bank risk governance structure variables | |
| ASIZE | Audit committee size is measured by total number of audit committee members |
| ACIN | Audit committee independence is measured by the proportion of the number of independent director on total member of audit committee |
| FAEA | Financial and accounting expert on audit committee is measured by the proportion of the number of financial and accounting experts on total member of audit committee |
| ACMF | Audit committee meeting frequency is measured by the number of meetings of audit committee a year, including offline and online meeting |
| SARC | “Stand-alone risk committee” existence is dummy variable which is 1, if the bank has a “stand-alone risk committee” and 0 otherwise |
| EXAQ | External audit quality is dummy variable which is 1, if bank use “Big 4” audit service and 0 if otherwise |
| RGEI | Risk governance effectiveness index |
| Other control variables | |
| BOSI | Board size is measured by total number of members on Board |
| BOIN | Board independence is measured by proportion of the number of independent director on total member of Board |
| BAAG | Bank age is measured by the years the bank was established |
| BASI | Bank size is measured by logarithm of the bank's total assets |
| SOWN | Stated ownership is measured by the ratio of stated-own share to total share |
| FOWN | Foreign ownership is measured by the ratio of foreign-own share to total share |
| GDPC | GDP per capita is logarithm of GDP per capita |
| CONC | Bank competition is measured as CR3 ratio which is suggested by Chong et al. (2013) |