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The Effect of Loan Portfolio Management on the Performance of Banks in Ghana
Article Number: SIS218674AI040623
4th June, 2023
Author(s):
Emmanuel Assifuah-Nunoo
Abstract:
The objective of the study is to determine the
influence of loan portfolio management on the financial performance of banks in
Ghana. The study adopted an explanatory cross-sectional survey as its research
approach. The research was based on panel data acquired from banks that were in
operation from 2010 to the present. Correlation analysis and regression
analysis were used in the study, with regression models built by the researcher
to assess the study's assumptions. The study shows that personal loans, real
estate loans, and small and medium-sized enterprise loans all collectively do
have a statistically significant impact on the financial performance of
commercial banks. Overall, the model shows that the variables included in the
model have a relatively good measure of fit and that the loan portfolio has a
significant impact on ROA, ROE, and CR. A number of empirical research back up
this conclusion, although it also conflicts with findings from certain other
investigations. The study recommends the diversification of personal loans to
reduce risks of defaults, which can be done by discriminating the borrowers
based on the information available.