ghanaopendata/ghanaian-research-english huggingface dataset:
Bank Concentration and Economic Costs of Deposit Mobilization and Credit Extension in Ghana

Welfare losses due to misallocation of resources in the deposit and loans markets and inefficiency costs in both markets resulting from the concentration of the Ghanaian banking industry are estimated, respectively using the Harberger's triangle and deviations from cost efficient stochastic frontier approaches. Corporate governance variables hypothesized in the literature to be correlated with bank inefficiencies were also investigated. Estimates suggest that net welfare loss over 2001 - 2008 averaged 2.6% of gross domestic product (GDP) per year, while inefficiency costs averaged only 0.7% of GDP. Bank concentration is positively correlated with efficiency in both deposits and loans markets. The elasticity of operating costs with respect to deposits exceeds the elasticity with respect to loans. We recommend that steps be taken to reduce bank concentration as the resultant narrowing of interest rate spreads will likely yield welfare gains that exceed efficiency gains realizable from increased concentration.

Source: UG
Bank Credit Risk and Credit Information Sharing in Africa: Does Credit Information Sharing Institutions and Context Matter?

The study examines credit information sharing through private credit bureaus and public credit registries and their effect on bank credit risk in low and high income countries in Africa. The study covers periods between 2006 and 2012 with 548 bank observations in Africa. Employing a Prais-Winsten panel data estimation, the study established that credit information sharing whether through private credit bureaus or public credit registries reduces bank credit risk in both low and high income countries and Africa as a whole. Further analyses reveal that credit information shared through public credit registries was only negatively and significantly related to bank credit risk when all countries that share credit information through public credit registries are observed as one unit but had no significant effect in low or high income countries. On the contrary, credit information shared through private credit bureaus reported a negative and significant effect on credit risk in low and high income countries as well as all countries that shared information through private credit bureaus. This suggests that credit information shared through private credit bureaus are more robust in dealing with bank credit risk regardless of a banks’ income bracket. Hence, countries that do not share credit information should do so especially through private credit bureaus so as to help reduce bank credit risk regardless of the income bracket differences. Again, governments in Africa must enact laws that expand the coverage and scope of credit information shared so as to enhance the effectiveness of information sharing.

Source: UG
Bank Deposit Mobilization, Loan Advancement and Financial Stability: The Role of Bank Branches in an Emerging Market

This study investigates the relationship between bank branches, financial intermediation and financial stability in Ghana using 35 banks between 2009 and 2017. Employing a panel, two-step dynamic GMM model, a non-linear “inverted U-shaped” relationship is documented between bank branches and financial stability. This implies that initial increases in bank branches promote financial stability but beyond 191 and 173 bank branches, bank branching derails banking stability. The findings further reveal that bank branches enhance the positive effects of deposits on bank stability whilst reducing the negative consequences of bank lending on financial stability. These findings imply that while bank management can rely on bank branches to enhance loans and deposits in promoting banking stability, bank management should also be cautious about the number of bank branches they keep giving that beyond a certain threshold, it may impede stability.

Source: UG
Bank diversification and performance in an emerging market

Purpose – The purpose of this paper is to investigate the impact of diversification on profitability, profit efficiency and financial stability of Ghanaian banks. Design/methodology/approach – The authors employed a panel regression technique on a data set of 32 banks from 2000 to 2015. The data envelopment analysis is used to compute profit efficiency scores with credit risk accounted for. Findings – The results suggest that income diversification decreases profit, profit efficiency and financial stability. The impact on profit and stability is U-shaped. The impact of asset diversification was found to be insignificant. High competition reduces both profitability and profit efficiency which is inconsistent with the quiet-life hypothesis of Hicks (1935), but financial stability increases with competition. High investment in tangible assets is associated with poor performance. Non-banking financial institutions that later became universal banks are not financially stable. Competition, size, age, government ownership and leverage which are controlled for and a sensitivity analysis conducted also provided relevant insights. Practical implications – The results are relevant in understanding the events in the Ghanaian banking industry in 2017–2018. Income diversification strategy is essential in determining the performance of banks. Management has to figure out the extent and scope of their diversification to benefit from the strategy. Originality/value – The authors examined diversification from the view-point of both the income statement and statement of financial position while most prior studies focused on only one aspect. The study is one of the few studies that employed the risk-adjusted profit efficiency measure in Sub-Saharan Africa.

Source: UG
Bank Efficiency and The Bank Lending Channel: New Evidence

We test the bank lending channel of monetary policy in Africa and examine the role of bank cost efficiency in this relationship. We use the stochastic metafrontier approach to estimate cost efficiency scores of 447 commercial banks in Africa. The A fixed effect (FE) estimator is used as the baseline estimation method. The 2SLS Instrumental Variables (IV) and two-step system GMM approaches are used as main estimation techniques to control for endogeneity. The results consistently show the existence of the bank lending channel in Africa: thus, bank credit responds to changes in monetary policy rate. Again, we find strong evidence to show that higher cost efficiency leads to higher loan growth. The results further show that Cost-efficient banks are less responsive to monetary policy shocks. The evidence suggests that bank cost efficiency weakens the bank lending channel. This implies that the effect of monetary policy on bank lending depends not only on bank size, capitalization and liquidity as espoused in literature but also on bank efficiency. The results are robust in formal sample-splitting. policy implications are discussed.

Source: UG
Bank finance and export activities of small and medium enterprises

This study examines SMEs’ access to bank finance and how that affects their export activities. The study adopts a probit model to assess the empirical relations. The findings of the study suggest that SME access to bank finance improves their likelihood to export. Such finance is critical to cater for the high fixed costs of exporting, international marketing and branding, and meeting higher quality standards required for overseas markets. The results of the study also indicate that older firms, more productive firms, and larger firms are more likely to take the important step of entering into the export market. Policy interventions should therefore be directed at reducing the bottlenecks that prevent SMEs from accessing funding from the commercial banks.

Source: UG
Bank Fraud Detection Using Support Vector Machine

With the significant development of communications and computing, bank fraud is growing in its forms and amounts. In this paper, we analyze the various forms of fraud to which are exposed banks d data mining tools allowing its early detection data already accumulated in a bank. We use supervised learning methods Support Vector Machines with Spark (SVM-S) to build models representing normal and abnormal customer behavior and then use it to evaluate validity of new transactions. The results obtained from databases of credit card transactions show that these techniques are effective in the fight against banking fraud in big data. Experiment result from the study show that SVM-S have better prediction performance than Back Propagation Netw orks (BPN). Besides the average prediction, accuracy reaches a maximum when training the data ratio arrives at 0.8.

Source: UG
Bank lending behaviour and systemic banking crisis in Africa: The role of regulatory framework

We examine how regulatory framework shapes the impact of bank lending behaviour on the probability of systemic banking crisis by using data from 52 African countries over the period 2006–2018. The study found that banks that lend beyond a certain level of threshold have the greater probability of causing a systemic banking crisis. The study provides empirical evidence in support of the argument that Above-average lending behaviour reduces the predicted probability of a systemic banking crisis in the presence of audit independence, stringent capital regulatory requirements, central bank independence and monetary policy framework.

Source: UG
Bank mergers and acquisitions and the post-merger and acquisition performance of combined banks: evidence from Sub-Saharan Africa

This study sought to ascertain the effects of bank mergers and acquisitions on the performance of merged banks in Sub-Saharan African (SSA) countries between 2003 and 2019. Specifically, the study aimed to investigate the impact of regulation-induced bank mergers and acquisitions (M&A’s) on the post-merger profitability of merged banks in SSA. The motivation for the study is to provide evidence for or against the regulator’s claims that regulation-induced bank M&As will improve the performance of merged banks in SSA. The article presents the results of the total sample of all mergers and acquisitions examined in the study and two sub-samples: the regulation-induced M&A sub-sample and the voluntary M&A sub-sample. We measure profitability by return on assets, return on equity, and net interest margin. The paper employed a dynamic panel Generalized Methods of Moments approach to analyse the relationship between bank M&As and profitability. The study found no profitability improvement after M&A across all profitability measures for the total sample and the two sub-samples. Instead, the empirical results reveal that bank profitability suffers after mergers and acquisitions across all profitability measures. The results show that, for regulation-induced mergers and acquisitions, a merged bank’s profitability is adversely affected from the beginning of the merger or acquisition to the sixth year of mergers and acquisitions. The findings also reveal that bank risk negatively affect profitability, while liquidity positively affect profitability, except returns on equity. Bank costs-to-income ratios as expected to show negative relationship with profitability. All macroeconomic variables show the expected relationship, positive for GDP growth and negative for inflation

Source: UG
Bank Ownership Types and Liquidity Creation: Evidence from Ghana

In this study, we examine bank liquidity creation and the effect of ownership types on liquidity creation in Ghana for the first time. The study employs data on 26 banks obtained from Bank of Ghana between 2006 and 2016. Three panel estimation strategies, including two-step GMM, Hausman-Taylor and Fixed effect models, employed to arrive at the findings. Employing the narrow liquidity creation computation approach, the results show that average bank liquidity created within the 11-year period consistently increased over the period and reported the highest liquidity created in 2016. Interestingly, when considering bank ownership types, listed, state-owned, and foreign-owned banks report the highest average liquidity created compared to their unlisted, privately owned and locally owned counterparts, respectively. Employing regression models, the study finds that foreign and privately owned banks are less likely to create more liquidity compared to their locally and state-owned bank counterparts, implying that state-owned and locally owned (domestic) banks create more liquidity. These results imply that while there is much room for creating more liquidity, policymakers may hasten liquidity creation through locally and state-owned banks while at the same time designing policies that entice foreign and privately owned banks to create more liquidity, which is good for economic growth.

Source: UG
Bank productivity in Africa

Purpose – The purpose of this paper is to provide a total factor productivity index for the African banking industry. It also investigates the impact of some internal and external determinants affecting bank productivity. Design/methodology/approach – The biennial Malmquist productivity index and various regression models (ordinary least squares, Tobit and truncated bootstrapped regression) are employed in analyzing data from 120 banks in 24 African countries from 2007 to 2012. Findings – The results indicate a general decline in productivity of banks in Africa, largely due to inadequate technological progress. State banks are found to be more productive than foreign and private banks. The regression analyses showed that non-executive directors, leverage, management quality, credit risk, competition and exchange rate have significant impact on bank productivity, but ownership and CEOduality do not. Practical implications – The results have implications for management of banks, governments and regulators. It shows the need for policy and investments that improve state-of-the art technology. The findings also seem to suggest poor management practices in input usage, especially in operational management, as well as costs emanating from non-interest sources. Bank managers need to address these deficiencies to improve productivity in African banking markets. Originality/value – A major contribution of this paper is the productivity index provided for the African banking industry. This study is also the first to apply the biennial Malmquist to analyze productivity in the African banking industry.

Source: UG
Bank risks, capital and loan supply: evidence from Sierra Leone

Purpose – The study aims to investigate the factors that influence banks’ loan supply in Sierra Leone. More specifically, it seeks to look into the effects of risk premium, leverage ratio and credit risk on banks’ loan supply in Sierra Leone. Design/methodology/approach – Using annual bank level data on an unbalanced panel of 13 commercial banks data observed over a period of ten years (2002 to 2011), the study employs time and bank-specific fixed effects model for estimation. Findings – The findings indicate that risk premium, the share of non-performing loans in the banks’ loan portfolio, tier 1 capital ratio (leverage ratio) and local currency deposit levels positively and significantly affect the share of loan supply to the private sector in banks’ earning assets. On the other hand, advances to local currency deposit ratio and bank size have significant negative effects on the share of loans in banks assets. The study also finds bank type and the growth rate of real GDP (a proxy for economic activity) to be important determinants of the share of loans in banks’ earning assets. Practical implications – The study recommends that the monetary authorities, banking practitioners and the government should pay keen attention to the key risk factors such as non-performing loans and risk premium in the operation of the banking sector to boost commercial banks’ loan supply. Originality/value – Sierra Leone’s banking sector presents a unique opportunity to study bank loan supply in relation to bank-specific features in the context of post-war financial reconstruction.

Source: UG
Bank-based and market-based development and economic growth: an international investigation

Purpose – The purpose of this paper is to investigate the relative impact of bank-based and market-based financial developments on economic growth from 1984 to 2015, using 60countries. Design/methodology/approach – This study uses fixed effect and generalized method of moments (GMM) to investigate the relative impact of bank-based and market-based financial developments on economic growth from 1984 to 2015, using 60 countries. The study further controls regional effects and the Asian crisis, as well as the global economic crisis. Findings – The empirical results of the study revealed that market-based development positively affects economic growth. Besides, market-based financial development indirectly promotes investment, which has the potential to strongly enhance growth. The findings of this study, therefore, provide more support to promarket- based financial development policies in these regions. Interestingly, bank-based development has no direct impact on development, but indirectly encourages investment, which also promotes growth. Originality/value – This paper is the first of its kind to empirically examine fixed effect and GMM to investigate the relative impact of bank-based and market-based financial developments on economic growth from 1984 to 2015, using 60 countries.

Source: UG
Banking disclosure and banking crises in Africa: does board gender diversity play a role?

The paper aims to investigate the impact of board gender diversity in explaining the relationship between bank disclosure and the predicted probability of banking crises in Africa. The study employs robust panel estimates based on an aggregate dataset of banks in 42 African countries over the 2006–2018 periods. From the study, board gender diversity (more women on boards and the presence of women on boards) has a positive impact on information disclosure of banks. We find that board gender diversity and bank disclosure have the possibility of reducing a banking crisis. We observe that board gender diversity enhances the reductive effect of bank disclosure on a predicted probability of a banking crisis. The implication is that women on boards provide prudent decisions on financial information disclosure that significantly reduce the possibility of a banking crises in order to ensure stable banking systems.

Source: UG
Banking efficiency analysis under corporate social responsibilities.

This paper expands the banking efficiency literature by developing a banking intermediation model that captures both profit-maximising and corporate social responsibilities (CSRs) of banks. Using a dataset of 21 banks for each year 2006 to 2008, we evaluate the relative efficiency of Ghanaian banks using data envelopment analysis (DEA) thus contributing to the scanty research on African banks. We observe a significant difference between the DEA model that includes CSR and the other without CSR, an indication that the inclusion of CSR may be important for bank efficiency assessment. As a further analysis, we use a second stage OLS regression which confirms a positive relationship between CSR and profitability and efficiency indicators. The findings suggest that considering CSR in efficiency assessment of banks is not only important on conceptual grounds, but also indicates that banks that are socially responsible may have economic advantages.

Source: UG
Banking efficiency in emerging economies: Does foreign banks entry matter in the Ghanaian context?

This study empirically examines the effect of foreign banks entry on banking efficiency scores, using the truncated regression data envelopment analysis model for 25s banks in Ghana, over a 6‐year period (2010–2015). We decompose the efficiency scores into three (technical, cost, and allocative efficiency), and the results indicate that banks in Ghana are marginally inefficient in operating closer to their optimal capacity. The findings show that the input‐oriented model slacks are needed to push an inefficient bank closer to where an efficient bank is positioned. From the results, an immediate and a short‐term entry of foreign banks have a consistent negative relationship with both technical‐ and cost‐efficiency scores whereas long‐term entry of foreign banks shows an inconsistent relationship with the three banking efficiency scores. Thus, the drive towards a positive impact of foreign banks entry on the three efficiency scores is dependent on the form of banking efficiency considered and the interaction term between competitive banking environment (competition) and foreign banks' entry. The study suggests that policymakers and managers in emerging markets should improve on their bank efficiencies in both a competitive banking environment and during periods of foreign bank entry. Moreover, managers of banks should make adjustment to their input resources in order to cope with new banking technologies from foreign bank entry—thereby improving banking efficiencies.

Source: UG
Banking efficiency in emerging economies: Does foreign banks entry matter in the Ghanaian context?

This study empirically examines the effect of foreign banks entry on banking efficiency scores, using the truncated regression data envelopment analysis model for 25s banks in Ghana, over a 6‐year period (2010–2015). We decompose the efficiency scores into three (technical, cost, and allocative efficiency), and the results indicate that banks in Ghana are marginally inefficient in operating closer to their optimal capacity. The findings show that the inputoriented model slacks are needed to push an inefficient bank closer to where an efficient bank is positioned. From the results, an immediate and a shortterm entry of foreign banks have a consistent negative relationship with both technical‐ and cost‐efficiency scores whereas long‐term entry of foreign banks shows an inconsistent relationship with the three banking efficiency scores. Thus, the drive towards a positive impact of foreign banks entry on the three efficiency scores is dependent on the form of banking efficiency considered and the interaction term between competitive banking environment (competition) and foreign banks' entry. The study suggests that policymakers and managers in emerging markets should improve on their bank efficiencies in both a competitive banking environment and during periods of foreign bank entry. Moreover, managers of banks should make adjustment to their input resources in order to cope with new banking technologies from foreign bank entry— thereby improving banking efficiencies.

Source: UG