Assessing the Effect of Financial Sector Reform Measures on Bank Performance in the Ghana Bank IndustryAssessing the Effect of Financial Sector Reform Measures on Bank Performance in the Ghana Bank Industry
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Date
2021
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KNUST
Abstract
The Ghana bank-based financial industry has had its intermittent turns over the past due to the deplorable conditions under which these banks operated. This study therefore was launched to assess the effect of these bank sector reform measures and how they affect bank performance in the areas of bank size, liquidity risk and credit risk. A descriptive design was used to aid in collecting secondary data between 2008 and 2016 from nine (9) banks. Having analysed data using both the fixed and random effects models in collaboration with the Hausman, it was established that the independent variables used produced mixed results in their relationship with bank performance. Whilst bank size and credit risk had a statistically significant positive relationship with Return on Assets, liquidity risk was also found to positively relate with bank performance under Return on Equity. In another development, bank size and credit risk had an inverse relationship with bank performance proxied by Return on Equity. Following these revelations, the study concludes that the behaviour of a particular variable on the dependent variable is dependent on management policy implementation and execution. Since the regressor variables behave differently under different conditions, management should come to terms with the reality that all regressor variables play important roles in determining bank profitability and so by this observation all bank level variables must be taken seriously to stabilise the bank since they behave differently under different profitability measures. The study offers the following recommendations; Management should open more branches to take advantage of reduced per unit cost of operations but should be cautiously; Banks should generally have a threshold for lending out funds to customers.
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A thesis submitted to the institute of distance learning, Kwame Nkrumah university of science and technology, Kumasi in partial fulfilment for the degree of master of science industrial finance and investment