Commercial Banks In Ghana Research Articles

Determinants of Capital Adequacy among the Commercial Banks in Ghana

The study examined the determinants of capital adequacy among selected commercial banks in Ghana. Eight banks were sampled for the periods 2009-2016, secondary data was gathered from the annual reports of selected banks as well as the Ghana Banking Survey authored by Price Waterhouse Coopers Ghana (PWC). A balanced panel approach was employed in investigating the determinants of capital adequacy among selected commercial banks in Ghana whilst comparing estimates of pooled OLS, random and fixed effects models and the generalized least square models to ascertain the robustness of the model. The finding suggests that all the independent variables statistically and significantly influence capital adequacy. While non-performing loans negatively relate to CAR, LFTD and ROA positively impact CAR or asset quality. It is recommended that the central bank and various banks operating in Ghana pay attention to strict compliance with the regulatory regimes to keep banks sound and fit to withstand distress and losses which may, in turn, affect the banking system and economy in entirety.

Risk and return analysis of listed financial companies in Ghana (a study of Cal Bank, Ecobank GH Ltd, Ghana Commercial Bank ( GCB) and Standard Chartered Bank (SCB))

ABSTRACTGlobally, Investors as well as business men and women are very optimistic about the future and therefore defer current use of resources for use at a later period with a higher expected rate of return. This is not so different in the case of Ghana. The main objective of the study is to analyse the risk and return of listed financial companies in Ghana. A sample of four financial companies listed on the Ghana Stock Exchange (Cal Bank Limited, Ecobank Ghana Limited, GCB Bank Limited and Standard Chartered Bank Ghana Limited) were selected and financial ratio (return on equity, return on asset, current ratio, quick ratio and financial leverage) computed using excel and analyzed using STATA. The study fitted a Pooled Ordinary Least Square (OLS) and Least Square Dummy Variable (LSDV) regression model with fixed effect model since fixed effect was tested to be statistically significant in the model. Empirical analysis of the data revealed that Banks with high risk levels proved to have a higher profitability as compared to the other banks under study. Standard Chartered Bank Ghana Limited and Ecobank Ghana Limited showed the highest levels of profitability, with Standard Chartered Bank Ghana Limited topping the charts in most years. However, on average, Cal Bank Ghana recorded the lowest rates of profitability.Also, a positive relationship existed between profitability (return on equity) and current ratio and financial leverage whilst an inverse relationship between return on equity and quick ratio. Overall model for both the Pooled OLS and the LSDV regression model tested to be statistically significant and a greater percentage (99.99%) of the total variability in return on equity was explained by the independent variables (return on asset, current ratio, quick ratio and financial leverage).Key words: Risk, Return, Pooled OLS regression model, LSDV regression model.

Credit Risk Management and Financial Performance of Listed Banks in Ghana

The purpose of this study was to examine the effect of credit risk management on the performance of selected listed commercial banks in Ghana. The study used secondary data collected from seven (7) banks listed on the Ghana Stock Exchange for a period of ten (10) years covering 2007-2016 with a total of seventy (70) observations. The credit risk management variables (independent variables) used were non-performing loans, loan loss provision, capital adequacy, with bank size (as controlling variable) whiles the financial performance of commercial banks (as dependent variable) was measured using return on asset. The data was examined using standard descriptive statistics and fixed effect model for hypothesis testing. Based on the test conducted on the data collected and the analyses of the results, this study found a significant relationship between the credit risk management variables (NPL, CAR and SIZE) and the profitability of listed banks in Ghana. In general, banks need to maintain an optimum level of CAR as per regulatory requirement so that they will not have difficulty in meeting their financial obligations, be able to absorb any financial shocks that may arise, protect their depositors’ investment and thus promotes the stability of the financial system. The study further recommends for banks in Ghana to control and monitor NPL, and keep the level of NPL as low as possible by emphasizing more on the ability of customers to pay back before credit approvals are given, a practice that will enable banks to achieve higher performance. Keywords: Non- Performing Loans, Loan Loss Provision, Capital Adequacy Ratio, Return on Assets, Ghana Stock Exchange, Fixed Effect, Random Effect. DOI: 10.7176/RJFA/11-6-05 Publication date: March 31 st 2020

Understanding Customers Perception of ATM Data Integrity

In spite of the numerous studies exploring customers’ perception of their banks, there is limited understanding of customers’ perceptions of Automated Teller Machines (ATM) data integrity issues. We therefore sought to understand customers’ perception of data integrity issues in ATM using Ghana Commercial Bank as case study. The objective was to understand the extent to which customers’ perception of ATM data integrity affect their relationship with the bank. Thus, the main research question is “To what extent is ATM data integrity issues affecting how customers transact business with the bank? The Adenta branch of Ghana Commercial Bank in Accra was used as case study. A Qualitative research approach was adopted given the exploratory nature of this study. Empirical data were gathered using a combination of observations and interviews. The informants were selected via purposive sampling technique. The study has shown that fairness expectation, assured customer delight, well-structured media post and settled perception of customer delight are the major factors that affect customers’ perception of ATM data integrity.

Impact of Credit Risk Management on Financial Performance: A Study of Selected Commercial Banks in Ghana

Impact of Credit Risk Management on Financial Performance: A Study of Selected Commercial Banks in Ghana

Board Audit Committee Characteristics and Financial Performance of Selected Commercial Banks in Ghana

The purpose of the study was to examine the influence of board audit committee characteristics on the financial performance of selected commercial banks in Ghana during the period of 2008 to 2017. The correlational design was employed. The study population was 23 commercial banks licensed under the Bank and Special Deposit Taking Institution Act with audit committee on their board and offices in Ghana as at December 2018. The sample size for the study was 13 commercial banks in Ghana. The lottery method of simple random sampling technique was used to select the 13 banks. The study made use of only secondary data. Statistical tools such as means, standard deviations, Pearson product moment correlation, and linear multiple regression analysis were used to analyse the data. The findings of the study revealed that when banks audit committee increase the frequency of their meetings, increase the number and quality of financial qualifications of member on board and also increase the size of the audit committee members on total board membership, it will have a significant influence on the banks’ financial performance. It was recommended to Bank of Ghana (BoG) and managers of the various commercial banks to ensure that audit committee members are independent, meaningfully represented at boards of the banks, and are people with expertise in accounting/finance.

The Effect of Mergers and Acquisitions on Bank Performance in Ghana

The study examined the consequence of mergers and acquisition on bank performance in Ghana. Specifically, the study investigated the effect of mergers and acquisition on net profit margin, return on assets and return on equity of commercial banks in Ghana. Data from the annual reports of eight (8) commercial banks over a 10-year period (2009-2018) were collected and analysed by the use of descriptive statistics, correlation analysis, and regression analysis. The findings revealed a negative and significant association between mergers and acquisition and net profit margin. There existed a positive but statistically insignificant relationship between mergers and acquisition and return on assets of commercial banks in Ghana. Further, there was a negative but statistically insignificant relationship between mergers and acquisition and return on equity. The results, however, could not establish a conclusive evidence of the impact of mergers and acquisition on bank performance, implying that mergers and acquisition might not necessarily improve bank financial performance.

The Effect of Corporate Governance on Financial Performance of Commercial Banks in Ghana

The Effect of Corporate Governance on Financial Performance of Commercial Banks in Ghana

Assessing the Impact of Interest Rate on Foreign Exchange Rate in Ghana

Foreign exchange rates determine the strength of a nation’s currency against other nation’s currency. Determination of foreign exchange rates in Ghana is therefore, of immense importance since the livelihood of many people in the country is tied to the performance of the local currency against the foreign currencies. Data from books and journals were used as the basis for the research; the research result was then compared to the work of earlier writers to ascertain the conformity or otherwise of the Ghanaian situation. The research involved comparing the percentage changes in interest rates of commercial banks in Ghana to the percentage changes in exchange rates for the period 2008 to 2018 to ascertain the relationship between the two variables. Quantitative research design was used for the work. The researcher determined the mean and standard deviation of the distribution and computed the coefficient of correlation for the variables and in addition the regression analysis. The coefficient of correlation was -0.5 and the gradient of the regression line was also -.05. The research showed that interest rates were strongly negatively related to the exchange rates in Ghana for the period 2008 to 2018. This explained why exchange rates in Ghana kept falling while interest rates rose continuously which is contrary to postulates that indicate, a rise in interest rates results in rise in exchange rates. The researcher noted that the great disparity between the lending rate and deposit rate in Ghana is a contributing factor to this anomaly.

Recapitalization and banks performance in Ghana

This study seeks to examine the profitability performance of local banks during the pre and post recapitalization period. Using the data of domestic banks from 2006 to 2016, and based on descriptive statistics, ratio analysis, and t-test, the study reveals that recapitalization policy has a positive effect on management efficiency for Ghana Commercial Bank. Management efficiency was 67.80 and 68.27 for pre and post recapitalization respectfully. However, CAL bank and HFC performed poorly in management efficiency after the recapitalization exercise. Again, the study reveals that CAL bank and HFC also performed better in Return on Assets after recapitalization. Finally, the study further shows a low rate of returns on shareholders' dividend, Return on Equity, after the recapitalization. From the findings, we conclude that recapitalization had negative effects on the performance of the local banks in Ghana. Therefore, we recommend, among other measures, that banks should endeavour to sustain their management efficiency, which translates into a positive total asset turnover. Also, the management of banks should manage their equity capital raised from shareholders very well to generate enough earnings for these shareholders, as this will entice other investors into the banking industry.

Corporate Tax Avoidance Incentives of Banks in Ghana

ABSTRACT This study built on the tax avoidance literature in at least two main strands: 1) applying the tax avoidance theories and hypothesis to financial institutions which have been neglected in the empirical literature; and 2) assessing the possibility of tax avoidance persistence among banks, from a developing country perspective. Data from 18 commercial banks in Ghana from 2010 to 2014 were analyzed using systems generalized method of moments estimation technique. The study concluded that while the presence of non-executive directors on boards, aging banks, and liquidity condition motivate banks to engage in tax avoidance schemes, big banks and banks at their latter stages in their lifecycle are discouraged from undertaking tax avoidance activities. Thus, tax avoidance activities exist in financial institutions just like non-financial firms but no evidence exists to support the assertion that tax avoidance schemes persist among banks. Managers of financial institutions must take advantage of existing tax avoidance opportunities by designing appropriate policies that factor in relevant firm-level characteristics.

Ghana Commercial Bank and Agriculture financing in Ghana, 1960s — 1980s

The British Bank of West Africa (BBWA) now renamed Standard Chartered Bank Limited and Barclays Bank Ghana Limited were the two prominent foreign Commercial Banks first established in the Gold Coast in 1897 and 1917 respectively. In the colonial era, these British banks only dealt with large businesses and did not extend credit to individual Gold Coast farmers because they were tagged as not credit-worthy or could not arrange suitable collateral for loans. Essentially, lack of access to credit continues to be a key factor contributing to the poor performance of the agriculture sector in general.1 In 1953, the Ghana Commercial Bank (GCB) was established as the first indigenous commercial bank to serve the people of the nation.1 Since 1953, the Ghana Commercial Bank has made agriculture financing its priority and has extended loans to its agricultural customers. This paper, which is multi-sourced, uses archival documents, Government Records, Annual Reports and scholarly secondary works, to examine the approaches and strategies used by GCB to support agriculture in Ghana from the late 1960s to 1980s. The paper specifically sheds light on the measures adopted by the bank to transform agriculture in the country.

The Effect of Leadership Styles on Employees’ Stress and Wellbeing: A Study of Commercial Banks in Ghana

This study investigated the effect of leadership styles on employees' stress and wellbeing with a specific focus on commercial banks in Ghana. The researcher used a quantitative research approach and employed a descriptive and cross-sectional research design to address the research objectives and questions respectively. Using a survey design with a sample size of three hundred (300) conveniently chosen for the study, the researcher collected the data from permanent employees of five (5) commercial banks within the Accra and Tema metropolises of Ghana. The Statistical Package for Social Sciences (SPSS version 21) software was used to analyse the data where descriptive statistics, correlation, and multiple regression were specified and evaluated. The findings revealed that both transformational and transactional leadership styles are actually practiced amongst commercial banks in Ghana with employees experiencing some levels of stress and wellbeing also. While a negative relationship was established between transformational leadership and employee stress, a positive relationship was found between transformational leadership and employee wellbeing. Meanwhile, transactional leadership was found to have a positive relationship with both employee stress and wellbeing. The study highlights and gives a compelling justification for investment into transformational and transactional leadership to minimize employee stress and enhance employee wellbeing which will in turn impact positively on employee performance and other organizational outcome.

Capital Structure and Bank Performance: Empirical Evidence from Ghana

AbstractThe aim of this paper is to examine the impact of capital structure on profitability of commercial banks in Ghana. The study used a sample of 21 commercial banks over the period 2000–2014 using panel corrected standard errors and two‐stage least‐squares estimation approaches. The results show that bank capital structure measured as capital‐to‐asset ratio is a robust and positive driver of bank performance (profitability) measures (return on assets and net interest margin). Additionally, the results further indicate that share of customer demand deposit positively affects bank profitability. The positive relationship between the capital‐to‐asset ratio and performance provides support for the bank capitalization policy implemented by the Bank of Ghana. Also, the findings provide evidence in support of the recent upsurge in bank short‐term deposit mobilization strategies and promotions by commercial banks in the country to enhance their deposit base.

Service innovation, service delivery and customer satisfaction and loyalty in the banking sector of Ghana

PurposeThe concept of innovation is gaining ground steadily in the context of an increasingly competitive and highly volatile banking sector. The purpose of this paper is to find out the role of service innovation (SI) in the relationship between service delivery (SERVD), customer satisfaction (CSAT) and loyalty in the banking sector of Ghana.Design/methodology/approachDrawing from banking and marketing literature, a conceptual framework was developed and tested using data from 450 sampled customers of commercial banks in Ghana. The data were analyzed using partial least squares structural equation modeling.FindingsThe findings indicate that SI has direct influence on SERVD and CSAT. Again the findings revealed a positive relationship between SERVD, CSAT and bank customer loyalty.Research limitations/implicationsThis study offers theoretical support for the adoption of innovative techniques in service provision and delivery.Originality/valueThis paper provides an initial study into innovation management in financial services context in an emerging economy.

CEO Power and Board Structure of Banks: A Developing Country’s Perspective

This study examines the implications of CEO power on the board structure of banks in the Ghanaian banking industry. Using a unique hand-collected dataset in respect of 21 commercial banks in Ghana for the 2009 – 2017 periods, the results show that CEO power underscores the absence or lack of gender composition of bank boards and constrains independent directors, while incentivizing larger board size in banks. Meanwhile, ownership structure and listing status critically underpin the CEO power effect on bank board structure, such that the actual sign of the marginal effect of CEO power on bank board structure varies with ownership structure and listing status. Overall, the study contributes to the understanding of the global antecedent of bank corporate governance (i.e. board structure) by providing an understanding of the implications of social connection hypothesis on bank board structure in a developing country's context.

Corrigendum: Quantitative efficiency assessment based on the dynamic slack-based network data envelopment analysis for commercial banks in Ghana

Background: Gains in bank efficiency improvement have widely been regarded as one of the most effective and efficient means of ensuring sustainability of a financial system. Aim: This article proposes a relative dynamic two-stage network data envelopment analysis model for measurement of bank efficiency based on the slack-based measure. Setting: Twenty-seven banks in Ghana during the period of 2009–2014. Methods: By considering simultaneous processes within the framework of two-stage data envelopment analysis, the slack-based measure approach identifies the sources of inefficiency in the banks. Results: In the empirical analysis, non-performing loans are an undesirable output in one production process, which should also be treated as a carry-over factor; that is to say, some non-performing loans from the preceding year can be collected in the current year. The carry-over factors should be used to indicate the presence of performance gaps that exist in the banks. The proposed model was used to measure the efficiency of the 27 banks in Ghana during the period of 2009–2014. We also present useful suggestions for improvement in bank efficiency based on the empirical results. Conclusion: The 27 main commercial banks in Ghana are far from efficient. For all banks, the efficiency score in the second stage is much higher than that of the first stage. That means more attention should be paid to the first stage of production in order to increase the banks’ efficiency.

The role of commission-based pay on employee retention in the Ghanaian banking industry: The case of GCB Bank Limited

Background: Human Resource is one of the valuable assets for organisations to facilitate the achievement of competitive advantage. Managing human resources is very challenging and must be done with care in organisations. Retention of human resources has is integral to the development and the accomplishment of the organisation’s goals and objectives. The main determinants for employee retention such as Career Development Opportunities, Superior Support, Work Environment, Rewards, and Work-Life Policies and recognition have a great paradigm to retain the employees for longer periods of time. Aim: In this article, an attempt has been made to assess the impact of HRM practices and its effectiveness on employee retention in Ghana Commercial Bank (GCB). Setting: The study was conducted in the Ghana Commercial Bank head office in Accra Methods: The study made use of both the qualitative and quantitative research methods in data collection. Both primary and secondary data were collected to assess the role of commission-based pay on employee retention in the Ghanaian banking industry. The researcher sampled 10 senior management and 50 junior staff who are relationship managers and relationship officers of the bank for the sampling size. Results: The study further revealed that commission-based pay involves meeting challenging targets which may contribute to demotivation if targets are not met. The study concludes that the form of motivation adopted by a company to remunerate staff on commission-based pay is essential to their work performance and retention. Conclusion: The study recommends that banks should train and develop employees and create structures that will create organisational citizenship.

Does Commercial Banks Presence Enhance Profitability in Ghana?

The last few decades have witnessed an increasing drive for bank presence across Ghana due to commercial banks appetite for increased deposit mobilization. Although bank presence is crucial in savings mobilization for economic growth and development, its relationship with the financial performance of the banks is unknown within the context of a developing economy. The current study therefore investigates the implications of banks presence on the financial performance of the commercial banks in Ghana, using data from 2007 to 2013. Panel regression is used for the estimation. Our findings show that increasing banks presence does not necessarily translate into profitability of the commercial banks. A plausible deduction from the results indicate that growth in bank presence (bank branches) cannot improve alternate distribution channels of banks operations due to the strong competition in the financial sector, cost of operations and low savings culture in Ghana. The results also reveal that market concentration, cost management, capital adequacy and activity mix contribute positively to the financial performance of commercial banks in Ghana but not credit risk and management quality. We also document that the macroeconomic environment has positive effects on the financial performance of commercial banks. Following the above, we recommend that commercial banks should pay critical attention to bank specific factors such as cost management and capital adequacy ratios. Moreover, managers of the economy should strive to create a conducive and stable environment to increase their penetration in Ghana.

Achieving Organizational Commitment through HRM Practices: The Ghanaian Banking Sector Experience

Organizational Commitment indicates the degree to which HRM practices are able to cultivate emotional connection between firms and employee goals. This study sought to investigate the nature of the relationship between the implementation of HRM practices and organizational commitment in the banking industry in Ghana. Employing the three component model of Allen and Meyer as the underlying theory of organizational commitment, the researchers examined the six HRM practices in five selected commercial banks in Ghana. Adopting the quantitative method of research, a descriptive including a multiple regression analysis was used to analyze the existing relationship between the HRM practices and organizational commitment. Findings from the study revealed that affective and normative forms of commitment were preferred to continuance forms of commitment. Again whilst respondent’s affective and normative commitment included performance based pay, communication and information sharing, training and development and rewards recognition, that of the continuance commitment also included communication, information sharing, recruitment and selection performance appraisal as well as rewards and recognition. The study concludes that there is a positive relationship between the implementation of HRM practices and organizational commitment. A further study is therefore suggested towards the conduct of a qualitative study in all banks in Ghana to consider the applicability of generalizability on the subject matter.