Credit risk and bank profitability: Evidence from Ghana stock exchange

Credit risk and bank profitability: Evidence from Ghana stock exchange

Richard Takyi Opoku, Peter Lawer Angmor, Lawrence Asare Boadi

This study analyzed the relationship between credit risk and profitability of banks on the Ghana Stock Exchange. A secondary data in a panel form of seven banks listed on the Ghana Stock Exchange was examined over a period of nine years, using a linear multiple regression model. One key measure of profitability was analyzed in this study that is return on equity. The independent variables included in the regression model were nonperforming loan to total loans and advances, and loans and advances to total deposits, bank size, leverage and growth. The results for the study indicate that non-performing loan to total loans and advances and loans and advances to total deposits have significant negative relationship with return on equity. Furthermore, a negative insignificant relationship was established between size and return on equity but significant positive relationships were found between growth and leverage and profitability.

Journal for Studies in Management and Planning

2016

https://scholar.google.com/citations?view_op=view_citation&hl=en&user=FZkijXgAAAAJ&citation_for_view=FZkijXgAAAAJ:u-x6o8ySG0sC

English