Investigating the Interrelationships among Financial Development, Strategy Efficiency and Economic Growth: Evidence from Ghana and Nigeria.

Investigating the Interrelationships among Financial Development, Strategy Efficiency and Economic Growth: Evidence from Ghana and Nigeria.

Augustine Opoku-Antwi

This thesis sought to identify strategies employed by the banking sectors in Ghana and Nigeria, establishes finance-growth relationship if any and finance-strategy-growth interrelationships. Ghana and Nigeria were selected because the two countries have the largest Economies in West Africa and undergone extensive financial sector reforms since mid-1980s. The research philosophy and approach employed in this study were positivism and quantitative methods. The annualised data used were from World Bank, Bank of Ghana, and Central Bank of Nigeria, and from all deposit money banks (DMBs) in the two countries from 1985 to 2015 for effective assessment. Porters Fives Forces of Competition Model, SWOT Analysis and Miles and Snow Strategy Typology (MSST) were used to identify different strategies. The Data Envelopment Analysis (DEA) model estimated strategy efficiency and econometric techniques such as Johansen Cointegration, Vector Error Correction model, Vector Autoregression Model and Granger Causality Test were employed to establish finance, growth and strategy interrelationships. The banking strategy of each DMB is largely determined by the strategic focus of the individual bank and in part by the monetary authorities. Retail banking is a major segment but vulnerable. Six major strategic themes were identified. The results obtained suggest that strategies employed by Ghanaian banking system are technically more efficient compared to their counterparts from Nigeria. Aggression does not lead to efficiency. In the short run, there was no causal relationship between the market-based financial system and economic growth in both countries. Ghana’s bank-based financial system has no causal link with economic growth. Financial development in Ghana causes economic growth in the short-run and long run while in Nigeria there exist bidirectional causal relationships with economic growth. In the Finance-Strategy-Growth interrelationships, it was established that these variables have some common linkages in both Ghana and Nigeria.
DMBs and regulators must address the regulatory compliance, capital management, technology infrastructure and cybersecurity. Ring-fenced retail banking segment for protection from all risks. Push the DMBs from pursing short-term gains compared with long-term gains that contribute to sustainable economic growth. This study contributed to finance-growth literature, opened a discussion on finance-strategy-growth interrelationships, developed strategy and strategy efficiency models.

Doctor of Business Administration

Ghana Technology University Library

December 2017