he Relationship Between Credit Risk Management and the Profitability of Banks in Ghana
Banks are faced with several types of risks. Prominent among these risks is credit risk. Profitability is key to the growth and survival of banks. This study therefore seeks to investigate the relationship that exists between credit risk and the profitability of banks in Ghana. To achieve this ob...
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doaj-ff312cc7c4e646458450a4de9ecec2f92020-11-25T04:03:51ZengUniversity of Finance and AdministrationACTA VŠFS1802-792X1802-79462020-11-011429211410.37355/acta-2020/2-01he Relationship Between Credit Risk Management and the Profitability of Banks in GhanaOwusu-Boafo, Roger0Obeng, Ernest1Addo, Jone Yeboah2Business School, University of GhanaSchool of Finance and Economics, Jiangsu University, ChinaAccounting Department, University of Education, Winneba, GhanaBanks are faced with several types of risks. Prominent among these risks is credit risk. Profitability is key to the growth and survival of banks. This study therefore seeks to investigate the relationship that exists between credit risk and the profitability of banks in Ghana. To achieve this objective, eight banks were sampled out of a population of twenty nine (29) banks over a ten (10) year period from 2005 to 2014. A panel regression was run using Return on assets (dependent variable) as a proxy for profitability while non-performing loan ratio and net charge off to total loans and advances (independent variables) were used as proxies for credit risk. Other variables such as size, growth and debt ratio which influence profitability were controlled for in the model. Secondary data comprising annual reports of the selected banks was used for the study. The study established a positive and significant relationship between credit risk and the profitability of banks in Ghana. This implies that banks in Ghana enjoy profit in the midst of all the credit risk. The study also confirmed the findings of previous studies that, size and debt ratio are factors that influence profitability as there was a positive and significant relationship with profitability.https://www.vsfs.cz/periodika/acta-2020-2-01.pdfcredit riskproftabilityreturn on assetnon-performing loansdebt ratio |
collection |
DOAJ |
language |
English |
format |
Article |
sources |
DOAJ |
author |
Owusu-Boafo, Roger Obeng, Ernest Addo, Jone Yeboah |
spellingShingle |
Owusu-Boafo, Roger Obeng, Ernest Addo, Jone Yeboah he Relationship Between Credit Risk Management and the Profitability of Banks in Ghana ACTA VŠFS credit risk proftability return on asset non-performing loans debt ratio |
author_facet |
Owusu-Boafo, Roger Obeng, Ernest Addo, Jone Yeboah |
author_sort |
Owusu-Boafo, Roger |
title |
he Relationship Between Credit Risk Management and the Profitability of Banks in Ghana |
title_short |
he Relationship Between Credit Risk Management and the Profitability of Banks in Ghana |
title_full |
he Relationship Between Credit Risk Management and the Profitability of Banks in Ghana |
title_fullStr |
he Relationship Between Credit Risk Management and the Profitability of Banks in Ghana |
title_full_unstemmed |
he Relationship Between Credit Risk Management and the Profitability of Banks in Ghana |
title_sort |
he relationship between credit risk management and the profitability of banks in ghana |
publisher |
University of Finance and Administration |
series |
ACTA VŠFS |
issn |
1802-792X 1802-7946 |
publishDate |
2020-11-01 |
description |
Banks are faced with several types of risks. Prominent among these risks is credit risk.
Profitability is key to the growth and survival of banks. This study therefore seeks to investigate
the relationship that exists between credit risk and the profitability of banks in Ghana. To
achieve this objective, eight banks were sampled out of a population of twenty nine (29)
banks over a ten (10) year period from 2005 to 2014. A panel regression was run using Return
on assets (dependent variable) as a proxy for profitability while non-performing loan ratio
and net charge off to total loans and advances (independent variables) were used as proxies
for credit risk. Other variables such as size, growth and debt ratio which influence profitability
were controlled for in the model. Secondary data comprising annual reports of the selected
banks was used for the study. The study established a positive and significant relationship
between credit risk and the profitability of banks in Ghana. This implies that banks in Ghana
enjoy profit in the midst of all the credit risk. The study also confirmed the findings of previous
studies that, size and debt ratio are factors that influence profitability as there was a positive
and significant relationship with profitability. |
topic |
credit risk proftability return on asset non-performing loans debt ratio |
url |
https://www.vsfs.cz/periodika/acta-2020-2-01.pdf |
work_keys_str_mv |
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