This study contrasts empirical studies which had focused on listed bank at the detriment of unlisted banks. In other to enhance public confidence in the banking sector and ensure financial inclusion, this study examined the relationship between leverage and performance of unlisted banks in Ghana. This study examined the relationship between leverage, other moderating variables and bank performance by collecting data from fifteen unlisted universal banks in Ghana from 2006 to 2016. The cross sectional time series research design with the quantitative research approach was adopted for the study. The fixed effect panel regression was used to analysis the variables from the data collected. The outcome of the study showed that unlisted banks in Ghana are highly leveraged with more debt to equity. The results also indicated that the level of gearing for unlisted banks has a positive relationship with the bank performance variables which are return on asset, return on equity and rate of profit. This is attributed to the cost of debt and type of debts that are contracted by the unlisted banks coupled with the efficiency in transforming such debts into less risky asset. The correlation and regression result showed a significant positive relation between firm size and bank performance. The study recommends that stakeholders of the banking industry must be concerned with the utilization of debts effectively and efficiently to enhance an optimal leverage ratio that could stand the risk of highly geared bank in a more integrated financial system. To achieve this, the regulators of the banking industry in Ghana must develop policies that seek to inject more equity funds in the operation of banks; guides in asset management and effective cost control in relation to leverage. This will boast the efficiency of the banking industry in their intermediation role.
Key words: Leverage, unlisted banks, bank performance, cross sectional time series, Basel I, II, III accord.