Dublin Core
Title
An Econometric View on the Effect of Bank of Ghana’s Policy Rate on Financial Risks and Performance of Listed Banks on the Ghana Stock Exchange.
Creator
Kojo Gyasi Dadsi
Description
The study used the Ordinary Least Square Method (OLS) and Pearson Correlation to determine the relationship between the Monetary Policy Rate (MPR) and banks financial performance in Ghana. The study also used same method to establish the effect of the MPR on financial risk and some key macroeconomic indicators. The samples banks constituted banks listed on the Ghana Stock Exchange (GSE) with data extracted from the Bank of Ghana’s website, Ghana Statistical Services (GSS) and annual reports of the banks from the period 2005 – 2016.
The findings revealed that MPR has a significant negative influence on ROE, ROA, BATO, DY and NPM which signifies that high policy rate distorts the performance of banks in Ghana hence the need to keep the rate down. MPR was also found to have a strong correlation and significant relationship with credit risk, liquidity risk and interest rate risk. MPR was found to have a negative relationship with GDP Growth. Though this relationship was not significant, the correlation results revealed a moderately strong relation of -0.5.
In conclusion, the negative influence of MPR on banks performance and its high effect on financial risk is can be considered as one of the major components affecting the overall performance of the economy. As banks play an important role in economic growth, it is recommended that the BoG must be more strategic and circumspective in taking their numerous monetary decisions.
The findings revealed that MPR has a significant negative influence on ROE, ROA, BATO, DY and NPM which signifies that high policy rate distorts the performance of banks in Ghana hence the need to keep the rate down. MPR was also found to have a strong correlation and significant relationship with credit risk, liquidity risk and interest rate risk. MPR was found to have a negative relationship with GDP Growth. Though this relationship was not significant, the correlation results revealed a moderately strong relation of -0.5.
In conclusion, the negative influence of MPR on banks performance and its high effect on financial risk is can be considered as one of the major components affecting the overall performance of the economy. As banks play an important role in economic growth, it is recommended that the BoG must be more strategic and circumspective in taking their numerous monetary decisions.
Subject
MBA IN FINANCE.
Date
MAY, 2018