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Article Number - 10A08C464822


Vol.9(6), pp. 44-53 , June 2017
DOI: 10.5897/JEIF2017.0846
ISSN: 2006-9812



Full Length Research Paper

Bank efficiency and default risk: The case of Ghana



Sarpong David (Jnr.)
  • Sarpong David (Jnr.)
  • Department of Accountancy, Accra Technical University, Ghana.
  • Google Scholar
Winful Christian Ernest
  • Winful Christian Ernest
  • Department of Accountancy, Accra Technical University, Ghana.
  • Google Scholar







 Received: 18 April 2017  Accepted: 22 May 2017  Published: 30 June 2017

Copyright © 2017 Author(s) retain the copyright of this article.
This article is published under the terms of the Creative Commons Attribution License 4.0


There seem to be inconclusive results regarding the interactions between bank efficiency, default risk and bank capital. This study tries to assess the dynamic interactions between efficiency estimates, default risk and bank capital in the Ghanaian banking industry, using bank specific panel data for 20 Ghanaian banks from 2007 to 2015. We employ panel vector autoregressive models (VAR) models which are estimated using generalized method of moments (GMM) to examine the interactions. The results give an indication that bank default risk has negative and statistically significant impact on cost efficiency but exerts only a mild influence on profit efficiency. However, there exist weaker evidence on the impact of both efficiencies on bank default risk. Bank capital on the other hand has significant positive impact on cost and profit efficiencies but both efficiencies have insignificant impact on bank default risk.

 

Key words: Efficiency, bank capital, Stochastic Frontier Approach (SFA), default risk.

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APA Sarpong, D. Jr., & Winful, C. E. (2017). Bank efficiency and default risk: The case of Ghana. Journal of Economics and International Finance, 9(6), 44-53.
Chicago Sarpong David (Jnr.) and Winful Christian Ernest. "Bank efficiency and default risk: The case of Ghana." Journal of Economics and International Finance 9, no. 6 (2017): 44-53.
MLA Sarpong David (Jnr.) and Winful Christian Ernest. "Bank efficiency and default risk: The case of Ghana." Journal of Economics and International Finance 9.6 (2017): 44-53.
   
DOI 10.5897/JEIF2017.0846
URL http://academicjournals.org/journal/JEIF/article-abstract/10A08C464822

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