Financial distress and its determinants; evidence from banks in ghana.
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Date
2023
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KNUST
Abstract
The main objective of this study is to assess the financial distress condition and its determinants of a country’s banks. The study adopts the correlational research design. The research employs a quantitative method because it wants to determine whether there are any important correlations between the variables. The study made use of secondary data. Secondary data sources provide knowledge gathered from previous sources: journal paper searches on the Internet or archives, as well as the financial statements of the banks operating in Ghana. The population from banks operating in Ghana and listed on Ghana Stock Exchange. The study purposely selected 5 banks in Ghana from 2012 to 2021. The study revealed that the majority of Ghanaian banks are not in financial distress. Also, it was revealed that the determining factors of the financial distress condition of banks include profitability and capital adequacy but excluded liquidity. Therefore, the study concludes that the determinants of the financial distress condition of banks include profitability and capital adequacy but excluded liquidity. This tells that firms generating an adequate profit and having healthy capital adequacy will suffer a little from financial distress. Therefore, it is recommended that corporate managers must also set and keep the right levels of liquidity, leverage, profitability, and revenue growth to ensure smooth operation and the organization's continuous survival. The government must also pay special attention to the insurance sector to decrease the likelihood of a financial catastrophe by developing a supportive climate and providing the necessary infrastructure
Description
A thesis submitted to the institute of distance learning, Kwame Nkrumah University of Science and Technology, Kumasi, in partial fulfilment of the requirements for the award of Master of science accounting and finance