Effects of Share Pricing on Firms’ Performance in Ghana

This study is designed to examine the effects of share pricing on firm‘s performance. Net profit earnings of the firm was used as the dependent variable for the study whilst the independent variables constituted some characteristic indicators that can affect the firm’s performance such as earnings per share, return on equity, return on assets, return on investments and overheads. Five listed companies namely; the Ghana Commercial Bank, Enterprise Insurance, Mechanical Lloyd, Aluworks Ghana Limited and Standard Chartered Bank were used for the study. A random model was used to test for the effects of the various variables on firm‘s performance using a panel data. The results show that earning per share was significant and positive in explaining firm’s performance whilst return on investment and overheads were significant but negative in explaining firm‘s performance. Return on assets and return on equity were however, insignificant in explaining firm’s performance. it is therefore recommended that firms trade on the stock exchange to attract more shareholders through their share pricing as this will enable them to increase their capital gain as well as the public patronizing not only in their shares but also being part of them and hence patronizing their products since they will have a stake in it

Credit Risk Management and Profitability of Rural Banks in the Brong Ahafo Region of Ghana

Credit risk management in rural and community banks has become more important not only because of the financial crisis that the world is experiencing currently, but also as a crucial concept which determines banks’ survival, growth and profitability. Because credit granting is one of the key sources of income generating activity in rural banks, the management of the risk related to credit affects the profitability of the banks. This study examines the impact of credit risk management on the profitability of rural and community banks in the Brong Ahafo Region of Ghana. We used the annual financial statements of ten rural banks from the period of 2006 to 2010 (five years) for our analysis. The panel regression model was employed for the estimation. In the model, definition of Return on Equity (ROE) and Return on Asset (ROA) were used as profitability indicators while Non-Performing Loans (NLP) and Capital Adequacy Ratio (CAR) as credit risk management indicators. The findings indicate a significant positive relationship between non-performing loans and rural banks’ profitability revealing that, there are higher loan losses but banks still earn profit. This indicates that, rural banks do not have sound and effective credit risk management practices.  Theoretically, non-performing loans reduce the profit levels of rural banks but in a situation where non-performing loans are increasing proportionately to profitability, then it means that rural banks do not have effective institutional measures to deal with credit risk management. What the banks do is that they shift the cost on loan default to other customers in the form of higher interest rate on loans. Higher interest margin charged on loan by rural banks due to weak credit risk management practices prevent microenterprises from accessing loans. Such a situation prevents business expansion and rural industrialization which are essential for poverty reduction. Most studies in this area tend to focus on the big commercial banks, thus this study with its focus on rural banks, contributes a lot to literature concerning credit risk management in small banks such as rural and community banks. In terms of policy directions, the Bank of Ghana will have to tighten its control mechanisms of on rural banks to stop this unfortunate trend in the rural banking industry. Key Words: Rural Banks, Credit Risk, Profitability, Ghan

The impact of microinsurance on household welfare in Ghana

Thesis (PhD)--Stellenbosch University, 2015.ENGLISH ABSTRACT: Microinsurance services have been operating in Ghana for the last decade, but the question whether they have enhanced the welfare of low-income households, mostly in the informal sector, is largely unresearched. In particular the study asks: does microinsurance improve the welfare of households through asset retention, consumption smoothing and inequality reduction? This question has been examined through the use of the 2010 FINSCOPE survey which contains in-depth information on 3 642 households across the rural and urban settings of the country. In order to control for selection bias and endogeneity bias, Heckman sample selection, instrumental variable and treatment effect models were employed for the evaluation. The results of the assessment have been compiled into four empirical essays. The first essay investigates the impact of microinsurance on household asset accumulation. The findings show that microinsurance has a positive welfare impact in terms of household asset accumulation. This suggests that microinsurance prevents asset pawning and liquidation of essential household assets at ‘give away’ prices. By absorbing the risk of low-income households, insurance equips them to cope effectively with risk, empowers them to escape poverty and sustains the welfare gains achieved. The second essay examines the impact of microinsurance on consumption smoothing. It delves into the capacity of microinsurance to enable households to avoid costly risk-coping methods which are detrimental to health and well-being. The results reveal that insured households are less likely to reduce the daily intake of meals, which is an indication that microinsurance is a better option for managing consumption smoothing among low-income households. The third essay investigates the effect of microinsurance on households’ asset inequality. The findings indicate that the asset inequality of insured households is less than that of uninsured households. Insured female-headed households have much lower asset inequality than male-headed households, but uninsured female-headed households are worse off than both uninsured and insured male-headed households. The regional trend reveals that developmental gaps impede the capacity of microinsurance to bridge the asset inequality gap. The fourth essay asks: Does microcredit improve the well-being of low-income households in the absence of microinsurance? The findings show a weak influence of microcredit on household welfare. However households using microcredit in combination with microinsurance derive significant gains in terms of welfare improvement. Microcredit may be good, but its real benefits to the poor is best realised if the poverty trapping risks are covered with microinsurance. To this extent, combining microcredit with microinsurance will empower the poor to make a sustainable exit from poverty. The findings of this thesis have pertinent policy implications for the government, the development community and stakeholders in the insurance industry. Microinsurance is a good instrument for improving the welfare of households and thus this research recommends its integration into the poverty reduction strategy of Ghana and a greater insurance inclusion for the lower end of the market

The effect of a moveable collateral registry on MSME access to finance: Evidence from Malawi

AbstractThis study explores to answer the question: does the introduction of a moveable collateral registry lead to significant increase in access to credit to micro, small and medium-sized enterprises? We examine this question through a unique dataset collected from the moveable collateral registry and commercial banks in Malawi. The findings indicate that the introduction of the registry in Malawi has led to marginal increase in MSME’s access to bank credit. Real property, however, remains the preferred collateral and ability to repay the loan is the most important consideration amongst banks in assessing whether to lend to micro, small and medium-sized enterprises. We recommend the registry to integrate into its programs financial literacy training for MSMEs, and credit guarantee schemes to mitigate the perceived high risk associated with small enterprises. This will equip the MSMEs to keep proper accounts and enhance their access to the registry and bank credit

Microfinance services and household asset accummulation in Ghana and South Africa: An asset-index approach

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Asset inequalities among households in Ghana: Can microfinance services bridge the gap?

Please help populate SUNScholar with the full text of SU research output. Also - should you need this item urgently, please snd us the details and we will try to get hold of the full text as quick possible. E-mail to [email protected]. Thank you.Ekonomiese En BestuurswetenskappeNagraadse Bestuurskoo