What factors influence the economic performance of the Bank of Ghana?

PurposeThis study sought to examine the interaction between rural bank performance, information and communication technology (ICT) investment, ICT diffusion and financial development.Design/methodology/approachData were sourced from the Association of Rural Banks (ARB) Apex and World Development Indicators (WDI) for the period 2014–2020. A total of 122 rural banks were used for this study. The study adopted the two-step system generalized method of moments (SGMM) estimation technique in assessing the interactions among variables.FindingsThis study found compelling evidence to support the positive effect of ICT investment on banks’ performance (return on asset and net interest margin). Further, ICT diffusion and financial development positively influence banks’ performance. The results show a positive moderating effect exerted by ICT diffusion and financial development on the impact of bank risk (bank stability) and ICT investment on all three performance measures.Originality/valueThe study focuses on the rural banking sector in the Ghanaian economy, compared to related studies that examine the subject matter for commercial banks. The moderating effects of ICT diffusion and financial development are assessed to guide policy on rural banking development in Ghana.

<p><big>This paper evaluates the fit-for-purpose of the monetary policy measures implemented by the Bank of Ghana in response to the COVID-19 pandemic. We examine the effectiveness of the BoG’s policy interventions in the context of vector autoregressions augmented with macroeconomic and financial indicators. We demonstrate that the BoG’s monetary policy measures have had nominal, real, and financial effects. The monetary interventions have been successful, as evidenced by the gradual reduction in the sovereign spread, improved financial stability, and increased real economic activity. Our findings suggest that balance sheet actions are less effective and should be moderated in the conduct of monetary policy in jurisdictions without zero lower bound constraints. However, the analysis indicates that in times of crisis, central banks should deploy both standard and non-standard tools to stabilize dysfunctional financial markets and avoid a deflationary spiral. The historical and variance decomposition of the data reveal that monetary policy shocks have historically made the largest contributions to the targeted macro-financial aggregates during the pandemic episodes.</big></p>

The level of causation and interdependencies among three commodities (cocoa, gold, and Brent crude oil), five banking sector performance indicators (Capital Adequacy Ratio (CAR), Non-Performing Loans (NPL), Return on Equity (ROE), Return on Assets (ROA) and Core Liquid assets to total assets (CLATA)), and three general macroeconomic indicators (Inflation, Exchange rate and Global Economic Policy Uncertainty) are explored in this study. As a result, the wavelet techniques are employed to investigate time-frequency and frequency-dependent nexus in the Ghanaian context. In terms of time-frequency, a mix of negative and positive bi-causality among commodities, banking sector performance indicators, and macroeconomic indicators are found. Outcomes from the wavelet multipleprovide that these variables are highly integrated, with the exchange rate leading in the long-run. Hence, implying that exchange rate in Ghana has a high susceptibility to shocks before the other variables in the study. We advocate Government of Ghana and policy-makers should fine-tune policies that take into account the impact on other economic factors. Policies should be initiated to minimise fluctuations in the exchange rate. To limit the adverse impact of inflation and GEPU, it is required that effective and efficient country-level policies geared towards stability be initiated to resuscitate the economy.

The revolution of the new economy is contemporaneous with an improvement in the financial sectors all over the world, while financial innovations make the sector more productive. The banking sector plays an important role in supporting economic growth especially in allocating funds from savers to borrowers. The productivity level of the banking system is of great importance for the whole economy to operate more effectively. Electronic banking has been the center-stage of modern banking with enormous benefits. From this point of view, this research paper contains an effort to critically examine the activities of the banks and make concrete suggestions in the new economy process also at the same time called the information economy, the network economy and the computer age. The research employed a research questionnaire from a survey that sought to seek opinion from customers and experts regarding the banking sector and the new economy in Ghana. Within the scope of the survey, bankers and customers from ADB, GCB, Fidelity Bank, Access Bank and Bonzali Rural Bank, as well as experts from the banking industry and entrepreneurs were interviewed. The findings of the study shows that in the adoption of the new economy in the banking sector, many challenges such as high charges, e-crime and fraud are of great importance. To deal with the challenges of adopting e-banking services, the research paper recommend that the universal banks or commercial banks should undertake rigorous internal control measures to reduce the high charges so as to establish a judicial banking system and also the bank of Ghana should develop a robust regulatory framework to avoid cyber risk and Ponzi banking schemes. Auditing fraud and forensic banking programs will also contribute immensely to macroeconomic stability. After all, even though such difficulties persist, customers and experts mainly use new economy products such as mobile banking, internet banking, and ATM service for ultimate purpose of withdrawing cash, checking account balance and bank statement request. In view of this, the new economy appears to have positively affected the banking sector's activities in Ghana, and the banks are beginning to equip their operations with the latest technology.

The International Monetary Fund (IMF) has played a pivotal role in shaping the economic policies of developing countries, including Ghana. This study aims to investigate the impact of IMF programs on the performance of the Bank of Ghana and the Ghanaian economy. Employing a quantitative research design, the study utilizes secondary data from reputable sources such as the World Bank, IMF, and the Bank of Ghana. Regression analysis is conducted to establish the relationship between IMF programs and the performance of the Bank of Ghana, as well as their impact on the overall Ghanaian economy. The findings of this study will significantly contribute to our understanding of the effectiveness of IMF programs not only in Ghana but also in other developing countries. Moreover, it will offer valuable insights into the key factors influencing the success of IMF programs in shaping the Ghanaian economy and the performance of the Bank of Ghana. Additionally, practical recommendations will be provided for policymakers, the Bank of Ghana, and other stakeholders to enhance the effectiveness of IMF programs in Ghana.

PurposeThis article examines public sector leadership during the economic crisis caused by the coronavirus pandemic in Ghana. It focuses on the Bank of Ghana – the nation's central bank responsible for monetary policy and financial sector leadership – and examines the critical leadership attributes that the central bank demonstrated through its administrative and policy responses to the crisis.Design/methodology/approachText-based content analysis is the method of investigation in this study. The analysis relies on textual data from the Bank of Ghana's monetary policy committee press briefings. The textual data are analyzed in three steps, namely pre-analysis, analysis and interpretation to identify patterns, themes and emphases and to make inferences about the central bank's public sector leadership during the coronavirus crisis in Ghana.FindingsThe findings from textual analysis of monetary policy committee press briefings show that the central bank demonstrated several criteria of effective public service leadership during the crisis, namely sensemaking, critical decision-making, communication, accountability, adaptability and, to an extent, learning. However, the textual evidence suggests that the Bank of Ghana needs to broaden its collaboration and coordination across a wider spectrum of stakeholders in economic crisis management, while not compromising its policy independence.Originality/valueThis article contributes to the emerging literature on public sector leadership during the COVID-19 crisis. It provides a unique perspective on public sector leadership through the lens of economic crisis management in a developing country context.

AbstractInformal banking activities have been increasing in many economies in recent times. These activities, though are interrelated with the formal banking activities, fall within a different regulatory framework within which the central bank conducts monetary policy. This has a potential effect on monetary transmission. The study, thus, investigated this issue in the Ghanaian perspective using the local projection approach. Using data sourced from the World Bank and Bank of Ghana databases, the study estimated an incomplete monetary pass‐through for Ghana. Notwithstanding this, informal banking further weakens the pass‐through. Other factors such as non‐performing loans, excess liquidity and the level of financial development were identified to weaken the pass‐through. These findings highlight the need for a prudent monetary framework that can address the challenge informal banking bring forth in monetary policy implementation.

The Central Bank monetary policy rate is one of the monetary tools that is use to regulate liquidity in an economy. In Ghana the objectives are to ensure price stability, low inflation and also to support the Government economic objectives including growth and employment. This paper empirically models the monthly monetary policy rates from the year 2001 to 2013 using ARIMA model and the data was obtained from the website of Central Bank of Ghana. From the results, it is reveal that ARIMA(2,1,1) is appropriate for modeling the monetary policy rates of Ghana with a maximum log likelihood value of -133.49, and least AIC value of 274.98, AICc value of 275.25 and BIC value of 287.16. An ARCH LM test and Ljung-Box test on the residuals of the model revealed that the residuals are free from heteroscedasticity and serial correlation respectively. Hence, it is adequate for forecasting the monetary policy rate of Ghana.

The economic development of any nation hinges on the health of its financial system. In recent years, the health of the Ghanaian Banking sector has been affected severely as a result of high levels of non-performing loans (NPLs), which has been identified as a major threat to the overall profitability and survival of banks. To minimize the impact of NPLs on the financial sector, key stakeholders such as the government, bank officials and regulators are working hard in that regard. However, any policy response aimed at dealing with the high rate of non-performing loans first requires the understanding of the underlying determinants of NPLs. Against this backdrop, this paper apply panel co-integration techniques to investigate the determinants of credit risk (NPLs) in the banking sector of Ghana. We use NPL as a proxy to measure credit risk and assess how it is influenced by macroeconomic and bank-specific factors. A balanced panel data of 16 universal banks in Ghana from 2010 to 2016 has been analyzed using Panel co-integration techniques such as Fully Modified Ordinary Least Squares (FMOLS) and Dynamic Ordinary Least Squares (DOLS). Our result shows that growth in the economy, measured by Gross Domestic Product (GDP) has significant influence on the NPLs of banks in the long-run. The results further revealed that capital adequacy, profitability and liquidity of banks are significant predictors of NPLs. However, our results suggest that bank size, inflation and interest rate have statistically insignificant influence on the NPLs of Ghanaian banks. The study recommend, among others, that whereas it is important for government and policymakers to work to improve macroeconomic outcomes, banks should also improve their capital adequacy, profitability, and efficiency position as these bank-specific interventions could significantly improve credit quality and minimize NPLs.

This research is to study the impact of some financial risk indicators on fifteen selected commercial banks’ in Ghana. The indication from the augmented Dickey-Fuller unit root test results show that the data series after first difference at the first order achieved stationarity. The analysis of the data revealed the existence of significant long run relationship between bank financial performance and the variables of financial risk in the banking sector. The granger causality test results reveal that there is unidirectional causality flowing from the variables of financial risk This suggest that the indicators of financial risk strongly and actively stimulate and improve the financial performance of banks in Ghana. The study recommends that bank managers should improve on the management of all the indicators of financial risk variables in order to improve on the achievement of the objective of the firm.