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Article Number - E2C9A8066163


Vol.9(8), pp. 80-88 , September 2017
DOI: 10.5897/JEIF2017.0854
ISSN: 2006-9812



Full Length Research Paper

Determinants of efficiency in the Ghanaian banking industry



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







 Received: 22 June 2017  Accepted: 26 August 2017  Published: 30 September 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


The twin forces of technological advancement and deregulation have led to financial integration and increased competition in the Ghanaian banking industry. This situation requires an extensive study into efficiency and its determinants in the Ghanaian banking sector, if Ghanaian banks are to survive and compete effectively in the global financial system. This study tries to determine the main determinants of efficiency in the Ghanaian banking industry, using bank specific balanced panel data for 22 banks in Ghana from 2010 to 2016. The study employed Arellano and Bover system generalized method of moment (GMM) estimator to evaluate the determinants of efficiency by regressing micro and macroeconomic variables on two dimensions of bank efficiency: cost and profit efficiency. The results gave an indication that operational cost, credit risk and bank size are the main determinant of cost efficiency in the Ghanaian banking industry; whereas profit efficiency is significantly influenced by only operational cost and credit risk. However, there is weaker evidence on the impact of capital structure, concentration inflation and real gross domestic product (GDP) growth on both cost and profit efficiencies.     

Key words: Efficiency, credit risk, bank size, generalized method of moment (GMM).

 

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APA David Jnr, S., & Winful, E. C. (2017). Determinants of efficiency in the Ghanaian banking industry. Journal of Economics and International Finance, 9(8), 80-88.
Chicago David Jnr Sarpong and Ernest Christian Winful. "Determinants of efficiency in the Ghanaian banking industry." Journal of Economics and International Finance 9, no. 8 (2017): 80-88.
MLA David Jnr Sarpong and Ernest Christian Winful. "Determinants of efficiency in the Ghanaian banking industry." Journal of Economics and International Finance 9.8 (2017): 80-88.
   
DOI 10.5897/JEIF2017.0854
URL http://academicjournals.org/journal/JEIF/article-abstract/E2C9A8066163

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