The figure plots credit growth on the Y axis against CAP (the ratio of equity capital to assets) on the X axis.
The left panel presents the estimated effect from CAP on credit growth based on point estimates from the fixed effect estimation. CAP exhibits a non-linear effect on credit growth characterized by the second order equation: -0.233 CAP + 0.0389 CAP^2.
The right panel presents the estimated effect from CAP on credit growth based on point estimates from the system GMM estimation (Table 6 column 5). CAP exhibits a non-linear effect on credit growth characterized by the second order equation: -0.389 CAP + 0.0521 CAP^2. The chart indicates with vertical dashed lines the sample mean for CAP at 6.1 percent, and the level of the CAP variable after adding and subtracting one standard deviation from the sample mean. When CAP is at its sample mean of 6.1 percent the estimated relationship implies that credit is growth equals -0.43 percent per year. The standard deviation of CAR corresponds to 2.2 percent. At one standard deviation below the mean, when CAP equals 3.9 percent, credit is estimated to growth at -0.72 percent per year, corresponding to a growth rate 0.30 percentage points lower compared to when CAP is at its sample mean. At one standard deviation above the mean, when CAP equals 8.3 percent, credit is estimated to growth at 0.36 percent per year, corresponding to a growth rate 0.80 percentage points higher compared to when CAP is at its sample mean.
The chart on the right panel also presents the relationship implied by the fixed effect estimation for comparison.