Macro-economic determinants of banks’ performance in Ghana
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Date
2023
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KNUST
Abstract
The research examined macroeconomic factors of bank performance in GSE-listed Ghana. Explanatory research was used. The demography for this study was GSE-listed banks. Since data was available, this research purposefully selected 9 listed banks from other universal banks in Ghana. Secondary data came from yearly reports. The data was collected 2010-2021. The research goals' parameters were estimated using random effect techniques. This research shows that macroeconomic conditions significantly affect Ghanaian banks' financial performance. Exchange rate variations, inflation, Treasury bills, GDP growth, and monetary policy rate changes may boost bank performance. However, inflation rates increase interest rates and asset and liability values, which raises funding costs and lowers bank profitability. The economic theory of inflation risk supports this. Inflation rates affect nominal and long-term interest rates, money demand, and credit supply, which affect a bank's liquidity and financial stability, according to the Fisher effect, expectations theory, and liquidity preference theory. The findings suggest that Ghanaian financial institutions should closely monitor macroeconomic indicators like exchange rates, inflation rates, treasury bills, GDP growth, and the monetary policy rate to mitigate risks and capitalize on opportunities. This may include implementing effective risk management strategies, diversifying portfolios, and maintaining adequate levels of liquidity to cushion against potential shocks
Description
A dissertation submitted to the department of accounting and finance in partial fulfilment of the requirement for the award of the degree of master of business administration (finance)