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Factors Influencing the Performance of Universal Banks in Ghana: A Bibliometric Review
Article Number: SIS135072AI041024
4th October, 2024
Author(s):
Akentara Richard, Isaac Appiah Amankwa, Phidelis Mawunyo Ebledzi, William Awuma, Anning Asafo Adjei
Abstract:
A strong banking or financial sector is a reflection
of a strong economy. The banking industry in Ghana has undergone significant
developments over the last few decades. This paper presents a bibliometric
review of the factors that influence the performance of universal banks in
Ghana, using Ecobank Ghana PLC as the case. An explanatory research design with
a case study strategy was adopted, and a quantitative approach was used to
examine the relationships among the variables. The data were from audited
reports for the 10 years 2012 to 2021 and the published financial statements of
the bank. Analysis was done using Microsoft Excel and STATA. Results showed
that the current asset ratio, which represents the liquidity position of banks,
asset quality, gross domestic product, and inflation, significantly affected
banks' performance in the long run. In
the short run, the banks' previous period's profit, Bank of Ghana’s (BoG's)
monetary policy rate, and inflation are the critical bank performance-driven
factors. The conclusion is that within the medium to long term, banks must
ensure that they are liquid by pursuing rigorous policies to safeguard the
quality of their assets, especially in the arena of loan provision and its
subsequent repayments. The growth performance of the economy and inflationary
pressures must be monitored closely by the banking sector. In the short term,
BoG's policy changes and inflation are critical influences. Therefore, the
study recommends that BoG must ensure strict adherence to its reserve
requirements by all industry players. Thus, BoG must fortify its offsite and
onsite monitoring while Banks must hedge strategically against the factors that
generate market risks.