Performance Of Banks In Ghana Research Articles

Information technology investment and rural bank performance in Ghana: the moderating role of ICT diffusion and financial development

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.

Mediating effect of corporate sustainability on corporate governance and performance of banks in Ghana: a post banking crisis perspective

Mediating effect of corporate sustainability on corporate governance and performance of banks in Ghana: a post banking crisis perspective

Assessing the Impact of Bank Liquidity on the Performance of Banks in Ghana

The ability of banks to perform their core role effectively depends largely on liquidity. In this study, the main objective is to examine the impact of bank liquidity on the performance of banks in Ghana. The study used both regression (pooled regression) and descriptive methods. The main findings indicate that liquidity has a positive impact on the performance of the bank. Further, interest income, efficiency of management staff as bank-specific factors promote liquidity of the banks. For macroeconomic variables, exchange rate volatility showed a significant inverse effect on the liquidity. As policy implication, management should adopt best liquidity management practices and a more efficient and advanced approaches to improve efficiency. This can be achieved by taking advantage of the revolution in Information Telecommunication (IT) and the mobile telecommunication industry. Also, the banks should reduce their concentration of loans and diversified to other less risky but attractive areas such as investment into government securities.

The Impact of Corporate Governance and Financial Disclosure on Financial Performance: A study of panel data from 18 Commercial Banks in Ghana.

The paper examines the impact of corporate governance and financial disclosure on the financial performance of banks in Ghana. Corporate governance was measured by three variables: board size, CEO duality, and board composition. Financial disclosure was also measured by timeliness, bank size, and quality of auditors. Financial performance, as the dependent variable, was measured by return on assets (ROA), and return on equity (ROE). The study used panel data from 18 commercial banks operating within the Ghanaian banking industry, both listed and unlisted, over a ten-year period (2009 to 2018). A random-effects regression model was used, and the results revealed that board size, timeliness, and quality of auditors were statistically significant and positively related to return on assets. Board composition, however, had a significant negative relationship with return on assets. There was no significant association between bank size and return on assets. Moreover, the findings of the study showed that board size and bank size had a positive and significant relationship with return on equity. Board composition and timeliness were however negative and statistically related to the return on equity. There was no significant nexus between the quality of auditors and return on equity. The study findings place emphasis on the combined effect of corporate governance and financial disclosure on financial performance, particularly within the banking industry in Ghana. Keywords: Corporate Governance, Financial Disclosure, Financial Performance, Commercial Banks.

An Analysis of Corporate Governance and the Performance of Rural Banks in the Upper West Region, Ghana

The study used the mixed research design in examining corporate governance and rural bank performance in Ghana's Upper West Region. Purposive and simple random sampling techniques were used in the study. A sample size of 48 participants, composed of Bank CEOs/Managers, Board Members, Human Resource Managers, Heads of Administration and Senior Staff of four Banks was used. Questionnaires and interview guides were used for data collection. Data was analyzed both quantitatively and qualitatively. The study found that ownership concentration, audit quality, and board independence are important factors in good corporate governance and are influenced by business size, leverage, and board size, with a P-value of 0.073<0.1. It was also found that good corporate governance proxy by CEO duality, board independence, ownership concentration and audit quality have a substantial impact on rural bank performance. However, with a P-value>0.1, it was discovered that CEO duality has a detrimental impact on excellent corporate governance. Corporate governance challenges the banks face include clients’ default in repaying loans, inappropriate corporate governance practices, high operational costs of the banks and board members’ incompetence and perpetuation in office. The study concluded that corporate governance significantly affects the functioning of rural banks in the Upper West Region. The study recommended a reduction in the tenure of office of directors, putting in place appropriate rules and guidelines for the operations of the boards and ensuring effective checks and balances on the activities of the boards by way of ensuring effective corporate governance practices. Keywords: Corporate, Governance, Performance, Rural Banks, Upper West Region DOI: 10.7176/RHSS/12-16-01 Publication date: August 31 st 2022

Effect of Pre-Merger and Acquisition Capability Strategies on Value-Based Financial Performance of Banks in Ghana

Purpose – The purpose of this paper is to examine the effect of pre-merger and acquisition capability strategies on value-based corporate financial performance of banks in Ghana. Design/Methodology/Approach: A cross-sectional survey was employed comprising four (4) acquirer banks listed on Ghana Stock Exchange (hereafter GSE) and four hundred and eighty-two (482) respondents purposively selected for this study. Data were analyzed using descriptive statistics, principal component analysis (PCA) and regression analyses. All the analyses were performed using SPSS v21. Findings: The findings reinforce the important position pre-merger and acquisition capability strategies on value-based corporate financial performance of acquirer banks. Amongst the pre-M&A success capability strategies that maximise shareholder value are: strategic intent; clear criteria; choice and evaluation of strategic partner and size mismatch; financial, legal and operational due diligence; integrative approach that strengthens the core business, expands the core business and unlocks new business areas; and effective communication before acquisition). Research Limitations/Implications: The study employed only a single research methodological approach, therefore future research could be undertaken using a mixed approach and triangulate to compare findings. Furthermore, the findings from the present study are cross-sectional, considering the limitations there in, a longitudinal approach should be explored. Practical Implications: Emphasis should be place on pre-merger and acquisition capability strategies that maximise shareholder value. This will help practitioners make legitimate decisions and conclusions that can foster business growth. Originality/Value: the effect of pre-merger and acquisition capability strategies on value-based financial performance was tested; previous studies have tended to test the direct effects.

Effect of Fraud Risk Management Skills on Value-Based Financial Performance of Banks in Ghana

Effect of Fraud Risk Management Skills on Value-Based Financial Performance of Banks in Ghana

The Effect of A Holistic Merger and Acquisition Capability Framework on Value-Based Financial Performance of Banks in Ghana

The Effect of A Holistic Merger and Acquisition Capability Framework on Value-Based Financial Performance of Banks in Ghana

The Effect of Risk-Based Auditing on Value-Based Financial Performance of Banks in Ghana

This study analyzes the effect of risk-based auditing on value-based financial performance of banks listed on the Ghana stock exchange. The study utilized a cross-sectional and quantitative research design. The study population encompasses listed banks in Ghana Stock Exchange (GSE) for the study period spanning thirteen years (2008 to 2020) owing to data availability. The study used a judgemental sampling technique to select nine (9) banks out of thirty-five (35) fully licensed and operational commercial banks in Ghana as per the (Bank of Ghana Report, 2021). Forty-eight (48) respondents were purposively selected for this study comprising of Managing Director, Head of Retail Banking, Head of Operations, Head of Risk Management, Head of Conduct and Compliance, Head, Internal Audit, Head, Financial Control and Strategy, Head of Information Technology, Head of Internal Control, and Head of Treasury. Principal Component Analysis (PCA) was used to identify the principal risk-based audit practices that add value to shareholders. Both linear and multiple regression models were employed to test the relationship between risk-based audit practices (RBAP) and value based financial performance of the listed banks in Ghana. The study established that risk management has a significant positive effect on the value-based financial performance of banks listed on the Ghana Stock Exchange. The study also revealed that annual risk-based planning has a significant positive effect on the value-based financial performance of banks listed on the Ghana Stock Exchange. The study also confirmed that internal audit capacity has a significant positive effect on the value-based financial performance of banks listed on the Ghana Stock Exchange. Lastly, the study found that internal auditing standards have a significant positive effect on the value-based financial performance of banks listed on the Ghana Stock Exchange. As such the null hypothesis that risk base financial audit has a significant positive effect on value-based financial performance was accepted. The study concluded that there was a significant positive relationship between risk based financial audit and value-based financial performance. it is recommended that a similar study be conducted on all financial and non-financial institutions that trade on Ghana Stock Exchange to facilitate comparison and allow for the generalization of findings on the effect of risk-based audits on shareholder value. The research recommends that other researchers should explore more about the influence of non-financial related factors and their implication on shareholder value in the Ghanaian Banking Sector.

Corporate real estate management and bank profitability

Acquiring property for any business is capital intensive and for that matter, strategically managing such assets is considered equally important. This paper provides an analysis of the value-adding attributes of corporate real estate management (CREM) and bank performance in Ghana. The multiple regression method was applied to a cross-section of both primary and secondary data sourced from 25 commercial banks in Ghana. The study shows that the banks identify with the value-adding attributes of corporate real estate asset management even though there are variations in the level of importance to individual banks. These variations are attributable to the unique mandates of the banks. Further analysis shows that CREM has significantly positive impacts on bank profitability by strategies that help to increase innovations, increase productivity, and promote marketing and sales. The finding suggests that optimizing these CREM strategies could help increase bank profits.

Corporate governance and financial performance of banks in Ghana: the moderating role of ownership structure

PurposeThe purpose of this paper is to investigate the moderating effect of ownership on the links between corporate governance and financial performance in the context of Ghanaian banks.Design/methodology/approachThe current study used a sample of 23 banks and the multiple regression method to analyze a panel dataset of 414 from banks over an 18-year period.FindingsThe findings revealed that audit independence, chief executive officer (CEO) duality, non-executive directors and banks size have a positive impact on performance. The findings also revealed that foreign ownership has an interacting effect between corporate governance and profitability.Practical implicationsThe practical implications of the current study demonstrated that good corporate governance creates value and must be invigorated for the interest of all stakeholders. Foreign ownership has an interacting effect between corporate governance and performance. Policymakers should formulate policies for attracting foreign investors.Originality/valueInterestingly, this study is the first of its kind that exclusively chose ownership structure to interact between corporate governance and bank performance in Ghanaian perspective. Such new insights on this relationship provide useful information to the government, academics, policymakers and other stakeholders. The growing economies of African countries, and the inadequate governance–performance literature in African context, have created a demand to appreciate the governance parameters in these countries and its influence on firm's performance.

The Effect of Capital Structure on Performance of Banks in Ghana: Evidence from Listed Banks on Ghana Stock Exchange

Capital structure decisions are still debatable issue in corporate finance literature. The issue has been whether capital composition of debt and equity is relevant; and if relevant, whether optimal capital structure exists. Whilst some scholars have empirically supported positive association between capital structure and firms’ performance, others have concluded an inverse relationship. Therefore, it is of great importance for managers to abreast themselves with modern theories and empirical findings available in order to serve as a guide when taking financial decisions on whether to source funds internally or externally to finance investment projects. The main object of the study is to investigate whether relationship exists between capital structure (measured in terms of short-term debt to total asset and total debt to total asset) and listed banks’ performance (measured in terms of earning per share) based on data gathered from 2010 to 2019. Balanced panel data was analyzed through the use of descriptive statistics, correlation analysis and Ordinary Least Square (OLS) regression analysis. The findings revealed a highly leveraged Ghanaian banks; with short term debt and total debt forming 71.57% and 85.19% of total assets respectively. It was also revealed further that capital structure has statistically significant association with banks’ performance. However; short term debts showed a positive relationship or correlation with performance whist total debt and performance exhibited an inverse correlation with performance. The findings would serve as a guide to bank managers when making financial decision on capital structure. Keywords: Capital Structure, listed banks, Ghana Stock Exchange, Performance, Ghana. DOI: 10.7176/RJFA/12-8-05 Publication date: April 30 th 2021

The Nexus Among Non-performing Loans, Lending Rates and Financial Performance of Banks in Ghana

The main purpose of the study was to examine the relationship among non-performing loans, Commercial Banks’ lending rate and financial performance of Commercial Banks in Ghana. The time series design was used along with the quantitative research approach. Secondary data on the selected variable and some control variables were accessed from the economic and monetary data base of the Central Bank of Ghana from 2006 to 2019 and used for the analysis. Both theoretical and empirical literature was reviewed to create a research gap for the study. Time series properties of the variables such stationarity and descriptive were done to assess the stability of the time series variables. The Augmented Dickey-Fuller unit-root test was used for the stationarity test since the time series plots indicated no possibility of serious structural breaks. Return on assets before tax, return on equity after tax, Commercial Banks interest rate, inflation and inter-banks interest rate were found to be significant determinants of Non-performing loans in the financial sector of Ghana. It was concluded that simultaneous relationships exist among the level of non-performing loans, Commercial Banks’ lending rate and financial performance of Banks in Ghana, hence anyone of them could serve as a lead variable or policy variable in ensuring a stable financial system in Ghana. It was recommended that the management of commercial banks must exploit other avenues of generating income such as direct project financing among others and reduce reliance on interest payment through increase in interest charges.

Regulatory capital requirements and bank performance in Ghana: evidence from panel corrected standard error

Over the past fifteen years, the Bank of Ghana has revised the minimum capital requirement to stabilize the banking sector. Motivated by the unintended consequences of regulatory capital, this paper provides empirical evidence between minimum capital requirement and bank performance relationship in Ghana. We draw data on a sample of 20 universal banks spanning 2008 to 2017. The Panel Corrected Standard Errors (PCSE) estimation was adopted. The results indicate that the minimum capital requirement has a significant positive impact on bank performance measured by return on assets (ROA) and equity (ROE). However, the effects turned negative after 1.7% and 1.6% performance thresholds for ROA and ROE, respectively. Given this, the study establishes the relationship between capital requirement and bank performance in Ghana to be double-edged. The capital requirement improves bank performance initially, but bank performance worsens after the threshold values. Policy implications for Ghana’s banks, regulators, and policymakers have been provided based on the findings.

Effect of Internal Audit Practices on Financial Performance of Banks in Ghana

Internal audit (IA) practices are considered as one of the key measures necessary for promoting healthy business activities. In this study, the researchers examine the effect of internal audit practices on the performance of banks in Ghana. The study used a sample of 154 respondents from 5 selected banks, the study adopted the quantitative research approach, data was analyzed using inferential statistical methods such as correlations and regression analysis. The study results indicate that there is a strong positive effect of monitoring, risk assessment and information and communication on the financial performance of banks in Ghana, whereas there was no significant effect of control environment and control activities on the financial performance of banks in Ghana. The study recommends that the management of banks should strengthen the control environment, by enhancing the policies and procedures adopted by the banks in safeguarding assets and properties, there is the need to continuously review the existing policies, procedures and activities performed to ensure that they have not outlived their usefulness in the wake of changing competitions and advancement in technology and management orientation.

Effect of Credit Risk and Liquidity Risk on the Performance of Commercial Banks in Ghana

In recent years, commercial banks in Ghana have seen great development in assets and profitability and have been playing increasingly important roles on national economy and social development which has become irreplaceable in a wide range. However, financial risks have been identified as the cause of hinderances to the banks’ normal development and has rendered some banks to fail. In recent years, Ghana’s commercial banks have faced vigorous challenges. An important setback is the collapsing and merging of commercial banks and the increment of the minimum capital requirement. The cause of these misfortunes can be attributed to the combine effect of liquidity risk and credit risk since bank managements, supervisory authorities and government overlooked their impact. The focus of this paper is to study the impact of credit risk and liquidity risk on the performance of commercial banks in Ghana. The paper studied the annual and financial reports of licensed commercial banks in Ghana over a period of 14 years. The hypotheses generated for the study was tested using the OLS regression. The results revealed a negative relationship between non-performing loans and performance (ROA). Similarly, credit ratio and loan to deposit ratio also had a negative effect on ROA of banks in Ghana. On the contrary, liquidity ratio revealed to have a positive relationship with the dependent variable. The study recommended that, Ghanaian commercial banks must adopt a general framework for liquidity risk and credit risk management to ensure avoidance or reduction in the occurrence of these risks. Control variables help to check the robustness and also explain the objectives of the study in a more precise way. Keywords : Credit Risk; Liquidity Risk; Commercial Banks: Performance; Ghana DOI: 10.7176/RJFA/11-17-11 Publication date: October 31 st 2020

Corporate governance and the financial performance of commercial banks in Ghana

This study aims to provide further evidence on the effect of corporate governance on the performance of Ghanaian banks. Two performance measures were used in this study, namely: Return on Asset (ROA) and Cost-Income Ratio (CIR). Data for the analysis were sourced from 21 commercial banks from 2005 to 2015. Regression estimation techniques were employed for analysis purposes. The result revealed that large board size reduces banks’ performance. Furthermore, CEO duality and foreign ownership negatively affect the performance of banks. However, while the effect of CEO duality was significant on CIR, it was not significant in the case of ROA. On the contrary, the effect of foreign ownership was only significant on ROA. Moreover, board independence has a significant positive effect on both CIR and ROA, while audit committee independence has no significant effect on CIR and ROA. The paper argues that for a good corporate governance practice, banks should institute a small board with more than half of the members being independent directors. Furthermore, the role of the board chair should be separated from that of the managing director/CEO. The study provides insight and further evidence to stakeholders and regulators to deal with the crisis in the Ghanaian banking sector.

Innovation Capabilities, Innovation Types, and Firm Performance: Evidence From the Banking Sector of Ghana

Innovation is considered a key driver for long-term success of firms in today’s competitive markets. This study explored the effect of innovation adoption on performance of banks in Ghana. Data for the study were obtained from 450 respondents comprising bank employees and customers in the Kumasi metropolitan area in Ghana. An exploratory factor analysis, confirmatory factor analysis, and structural equation modeling were used to analyze the data via SmartPLS 3 and SPSS V.22. Findings from this study revealed that the innovation dimensions that contribute to bank innovation are organizational, product, process, and marketing innovations. The study further revealed a direct and positive relationship between innovation dimensions (product, marketing, and organizational innovations) and bank performance. In addition, findings from this study showed a positive relationship between innovation capability and the four dimensions of innovation (organizational, product, process, and market innovations). Also, the findings revealed a significant and positive relationship between the dimensions of innovation (market, process, and product innovations) and firm performance. The practical implication is that, choosing the appropriate innovation types can enhance bank performance as well as satisfy customer needs. This study extends the literature on innovation adoption and organizational performance in the financial services from an emerging market context.

Credit Risk Management as a Good Measure of Financial Performance of Banks in Ghana

Banks are exposed to several forms of risks that affect their performance. The main objective of banking management is to maximize wealth. In efforts to realize this goal managers and shareholders should evaluate the cash flows and risks to direct its financial resources in different areas of use. This paper aims to investigate the effect of credit risk management (CRM) on financial performance (FP) of banks in Ghana. The indicators used in the study are CRM, bank credit (BC), liquidity risk (LR) and capital risk (CR) are regressed on FP. The CADF and CIPS panel unit root tests report that, the variables are non-stationary at their levels but become stationary at their first difference. The Westerlund-Edgerton panel bootstrap cointegration test show that, the variables are cointegrated and hence possess a structural long-run relationship. Also the Granger causality through the ARDL model show; (1) A two-way causality between bank credit and FP in the long-period and short-period; (2) A positive and significant one-way cause running from liquidity to FP, a one-way causality between capital risk and FP, lastly one-way causality in the long-period for LR and bank credit are evidenced; (3) The ARDL framework is evidenced to be very significantly effective to the application of Granger causativeness test. Keywords: bank credit; credit risk management; financial performance; liquidity risk. DOI: 10.7176/JESD/11-4-04 Publication date: February 29 th 2020

Relationship between Capital Structure and Banks’ Performance; an Evidence of Banks Listed on the Ghana Stock Exchange

The capital structure of an organization is potentially one of its most important choices. The success of every organization depends on its capital mix or structure. This places a greater responsibility on financial managers to decide the best capital combination that will maximize shareholders’ wealth. Due to the abstract nature of capital structure in an organization, this paper attempts to examine the influence of capital structure on the financial performance of banks in Ghana. The study uses debt ratio (DR) as proxy for banks capital structure and uses return on assets (ROA), return on equity (ROE) and earning per share (EPS) as proxies for banks performance measurement in the country understudy. The study sampled 7 banks out of the 11 banks listed on the Ghana stock exchange (as at 2017) over a seven-year period from 2008 to 2014 and data from their respective annual financial statements were extracted. It was concluded that capital structure has a negative effect on banks performance as the results confirms various studies reviewed.