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Author: Lawrence Asamoah
Publisher:
ISBN:
Category :
Languages : en
Pages : 7
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Book Description
Understanding the causal factors of credit risk among commercial banking is imperative due to the high risk financial industry in developing economies face in their operations. Specifically, this paper examines the determinants of credit risk of commercial banks in Ghana from 2007-2014 using Robust Least Squares regression analysis. The results show a significantly positive relation between the bank credit risk and leverage. However, a negative relationship between the credit risk and management efficiency was found. With regard to the relationship between bank credit risk and profit, the results show a significant negative association. It is recommended that commercial banks should continue to diversify their lending activities to productive sectors to mitigate credit risk.
Author: Lawrence Asamoah
Publisher:
ISBN:
Category :
Languages : en
Pages : 7
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Book Description
Understanding the causal factors of credit risk among commercial banking is imperative due to the high risk financial industry in developing economies face in their operations. Specifically, this paper examines the determinants of credit risk of commercial banks in Ghana from 2007-2014 using Robust Least Squares regression analysis. The results show a significantly positive relation between the bank credit risk and leverage. However, a negative relationship between the credit risk and management efficiency was found. With regard to the relationship between bank credit risk and profit, the results show a significant negative association. It is recommended that commercial banks should continue to diversify their lending activities to productive sectors to mitigate credit risk.
Author: Michael Nyarko-Baasi
Publisher: GRIN Verlag
ISBN: 3656397546
Category : Business & Economics
Languages : en
Pages : 99
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Book Description
Master's Thesis from the year 2012 in the subject Business economics - Investment and Finance, grade: B, Methodist University College Ghana, language: English, abstract: This study focused on the challenges of Credit Risk Management in Ghanaian Commercial Banks with the searchlight on the operations of Barclays Bank Ghana (BBG), Ghana Commercial Bank (GCB), Zenith Bank Ghana and Merchant Bank Ghana (MBG), all operating in the Accra Business District. The study essentially had the objective of examining the loan application appraisal processes of these banks as well as ascertaining the adequacy of their loan monitoring mechanism. In conducting the study, the researcher adopted the questionnaire technique as the research instrument to solicit information from both customers and officials of the banks. Purposive sampling technique was employed in selecting officials from the banks whose duties centered on Credit Risk Management. Random sampling technique also helped the researcher in selecting the sample size for the customers of the banks. Findings made uncovered the fact that poor sales and exchange rate losses, product substitutes due to trade liberalization and inability to enter into the foreign market and account for a chuck of the loan default cases experienced by the banks. It is recommended, among others, that the Government’s information on Venture Capital Trust fund should be made more accessible to the SMEs sectors through official sponsored workshops whilst the capacity and logistics of the Eximguaranty Limited are strengthened to alleviate the credit requirement ‘headaches’ of SMEs. Conclusions drawn centered on the fact that some banks minimize risk factors in credit management by entering into some covenants with borrowers’ under which certain figures and ratios are periodically sent to the banks electronically. Most banks also dispatch their officials to monitor and evaluate the loan disbursement schedules agreed with the customer to minimize bad debt associated with SMEs.
Author: Anthony Abaidoo
Publisher: GRIN Verlag
ISBN: 3668580227
Category : Business & Economics
Languages : en
Pages : 57
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Book Description
Research Paper (postgraduate) from the year 2015 in the subject Business economics - Banking, Stock Exchanges, Insurance, Accounting, , language: English, abstract: The main purpose of this study was to examine the determinants of loan default and its effects on financial performance of commercial banks in Ghana by using Fidelity Bank Limited as a case study. The study employed quantitative and qualitative research techniques as the research design. In achieving the research objectives primary and secondary data was used. The primary data was collected through a well structured questionnaire. Simple random technique was used to select 120 loan clients and a purposive sampling was used to select a credit staff. The data was collected from four branches of Fidelity Bank in the Brong Ahafo Region of Ghana. It was realized that the delays in loan approval, poor management, poor credit appraisal and diversion of loans are the main determinants of loan default in Fidelity bank. The study also found that SME clients (49.5%) defaults more than agric, personal and salary loan clients. The major cause of loan default according to the findings of this study was decrease in demand of goods and service (16.1%) sold by the loan clients. Again, it was realized that loan default has a negative impact on profitability. It is recommended that the following measures should be implemented to reduce the rate of loan default; good credit structuring, consistent monitoring, sound credit risk policies and standards, quality analysis, well trained staff, good corporate governance system, independent credit assessment, rescheduling and provision of additional funds.
Author: Asl? Demirgüç-Kunt
Publisher: World Bank Publications
ISBN:
Category : Bancos comerciales
Languages : en
Pages : 52
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Book Description
March 1998 Differences in interest margins reflect differences in bank characteristics, macroeconomic conditions, existing financial structure and taxation, regulation, and other institutional factors. Using bank data for 80 countries for 1988-95, Demirgüç-Kunt and Huizinga show that differences in interest margins and bank profitability reflect various determinants: * Bank characteristics. * Macroeconomic conditions. * Explicit and implicit bank taxes. * Regulation of deposit insurance. * General financial structure. * Several underlying legal and institutional indicators. Controlling for differences in bank activity, leverage, and the macroeconomic environment, they find (among other things) that: * Banks in countries with a more competitive banking sector-where banking assets constitute a larger share of GDP-have smaller margins and are less profitable. The bank concentration ratio also affects bank profitability; larger banks tend to have higher margins. * Well-capitalized banks have higher net interest margins and are more profitable. This is consistent with the fact that banks with higher capital ratios have a lower cost of funding because of lower prospective bankruptcy costs. * Differences in a bank's activity mix affect spread and profitability. Banks with relatively high noninterest-earning assets are less profitable. Also, banks that rely largely on deposits for their funding are less profitable, as deposits require more branching and other expenses. Similarly, variations in overhead and other operating costs are reflected in variations in bank interest margins, as banks pass their operating costs (including the corporate tax burden) on to their depositors and lenders. * In developing countries foreign banks have greater margins and profits than domestic banks. In industrial countries, the opposite is true. * Macroeconomic factors also explain variation in interest margins. Inflation is associated with higher realized interest margins and greater profitability. Inflation brings higher costs-more transactions and generally more extensive branch networks-and also more income from bank float. Bank income increases more with inflation than bank costs do. * There is evidence that the corporate tax burden is fully passed on to bank customers in poor and rich countries alike. * Legal and institutional differences matter. Indicators of better contract enforcement, efficiency in the legal system, and lack of corruption are associated with lower realized interest margins and lower profitability. This paper-a product of the Development Research Group-is part of a larger effort in the group to study bank efficiency.
Author: International Monetary Fund
Publisher: International Monetary Fund
ISBN: 145528257X
Category : Business & Economics
Languages : en
Pages : 54
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Book Description
Since the 2003 Financial Stability Assessment Program (FSAP) update, Ghana’s financial system has undergone rapid growth and structural transformation. The authorities have been implementing reforms to enhance the financial system’s resilience to shocks and its contribution to growth. The vulnerabilities reflect the interplay of several factors, but state involvement is an important element. The other contributory factors include deficiencies in commercial banks’ risk management, supervision, and the insolvency regime. Additional recommendations are detailed in the Report on the Standards and Codes on Compliance (ROSC) with the Basel Core Principles (BCP).
Author: Abraham Nyebar
Publisher:
ISBN:
Category : Agricultural credit
Languages : en
Pages : 296
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Book Description
Author: Y. Abdul Karimu Tossa
Publisher:
ISBN:
Category :
Languages : en
Pages : 18
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Book Description
This study examined the Technical Efficiency (TE) of commercial banks in Ghana and the determinants of TE in the banking sector. Data Envelopment Analysis (DEA), Random-Effects Tobit regression and Ordinary Least Square (OLS) were the statistical tools used on a sample of 21 banks operating between 2009 and 2013. The results showed that there were more technically inefficient banks in the country than there were technically efficient ones. Another revelation was that, on the average, TE varied directly in proportion to bank size within the two upper quartiles but large banks did not benefit from economy of scales as an edge over small banks. Finally, Gross Domestic Product (GDP) per capita, inflation, credit risk, size and operating cost negatively influenced efficiency while market concentration had a positive influence on efficiency. In our recommendations, we admonished Bank managers to minimize their operating cost and credit risk. Similarly, we recommended that government limit inflation. Finally, we upheld the continuation of the policy of higher capitalization that the Bank of Ghana had been pursuing.
Author: Isaac Adu Larbi
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
Non-performing loan had been a challenge of banks in Ghana and its impact on their asset quality is very challenging. This study examined the determinants of non-performing loans and their impact on profitability of banks and capital adequacy of banks. The study adopted three specific research objectives which were to examine the determinants of non-performing loans of commercial banks, examine the effect of non-performing loans on the profitability of the selected commercial banks in Ghana and examine the effect of non-performing loans on the capital adequacy of the selected commercial banks. The study adopted a quantitative research approach and used pooled ordinary least square regression as the estimation technique. The study used Pearson correlation test to test the association of the variables and it was found that non-performing loans and profitability have negative relationship and very significant. It was revealed that non-performing loans have negative and significant relationship with capital adequacy. The study further revealed that inflation rate, economic growth, risk tolerance of banks, loan growth, management quality and size were major determinants of non-performing loans and very significant.
Author: Kwadwo Boateng
Publisher:
ISBN:
Category :
Languages : en
Pages : 12
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Book Description
The study examined the determinants of profitability of banks in India and Ghana. The main objective of the study was to find out the factors that make significant impact on profitability of banks in both India and Ghana and also the factors that make unique significant impact on profitability of banks in Indian but not Ghana and vice versa. Data from the financial statements of 10 banks from each country for 7 years period was used in the study. ROA was the profitability measure which served as the dependent variable. The independent variables were made up of bank specific and macroeconomic variables. The bank specific variables employed were; credit risk, liquidity, net interest margin, capital adequacy ratio, and bank size. Annual GDP growth rate and CPI-Inflation rate were the macroeconomic variables. Multiple regression was the statistical tool used in the analysis to ascertain the relationship between the dependent and the independent variables. The findings indicated that credit risk, net interest margin, capital adequacy and inflation were the most important factors that significantly affect profitability of banks in both Ghana and India. Cost to income ratio and bank size had an insignificant impact on profitability of Indian banks but impacted significantly on Ghanaian bank's profitability. It has therefore been recommended that strict compliance of capital adequacy requirement must be enforced by the regulatory bodies in both countries. Also prudent credit risk management practices must be adhered to by managers of banks in both countries. Again as the size of bank increases, internal control measures must be strengthened by managers of banks in both countries in order to minimize excessive cost of operation.
Author: Luc Eyraud
Publisher: International Monetary Fund
ISBN: 1513576518
Category : Business & Economics
Languages : en
Pages : 85
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Book Description
Sub-Saharan African countries are facing an unprecedented health and economic crisis that is likely to severely hurt credit quality and raise non-performing loans from already high levels. Banks have a critical role to play not only during the crisis by providing temporarily relief to businesses and households, but also during the recovery by supporting economic activity and facilitating the structural transformations engaged by the pandemic.
