The Relationship between the Percentage Share of Industry Deposits and the Percentage Share of Industry Loans and Advances: The Case of Ghanaian Banking Industry

The purpose of the study was to describe the relationship between the percentage share of industry deposits taken by a bank and the percentage share of industry loans and advances given by such bank, using 2012 fiscal year as a reference point. The study made use of cross-sectional analysis. The population of this study was made up of all commercial banks operating in Ghana. They are twenty-six (26) in number. However, a sample size of twenty-four (24) of these banks was used for the study. Data was mainly collected from secondary sources including financial reports of the selected banks, scholarly journals, business and financial newspapers, corporate journals, and report of 2013 Ghana Banking Survey. Descriptive, inferential and exploratory data analyses were performed. The study revealed that there is a strong positive correlation between the percentage share of industry deposits and the percentage share of industry loans and advances. The regression model which establishes the relationship between percentage share of industry deposits and lending is given as Y = 0.423+ 0.899X, where Y is the percentage share of industry lending and X being the percentage share of industry deposits. The coefficient of determination (R-sq) is 85.6%. The study therefore confirms the findings by Olokoyo (2011) that commercial banks deposits have the greatest impacts on their lending. Keywords: Banks, Industry, deposits, loans and advances, relationship, percentage shar

The Relationship between Net Interest Margin and Return on Assets of Listed Banks in Ghana

The purpose of the study was to find out the trends of Net Interest Margin (NIM) and Return on Assets (ROA).  It also sought to find out the relationship between the NIM and the ROA of the listed banks in Ghana, considering the period 2005-2011. Seven out of the nine listed banks were considered for the study. The main sources of data were from the annual reports of the selected listed banks, as well as other relevant scholarly journals. Trend analysis was used to find the trend of NIM and ROA of the listed banks. Regression and correlation analyses were used to find the relationship and the strength thereof between NIM and the ROA. The dependent variable was Profitability (ROA); while the independent variable was Net Interest Margin (NIM). The study revealed that there is a strong positive correlation between the NIM and the ROA (Profitability) of the listed banks. The regression equation between NIM (X - Axis) and ROA (Y - Axis) is Y = 0.577X – 1.427. The correlation co-efficient, R2 is 0.826. This means that 82.6% of ROA is explained by the NIM. When Net Interest Margin decreases, Return on Assets (Profitability) decreases; and vice versa. Keywords: Net interest margin, return on assets, profitability, relationship, regression, correlatio

Role of Bank Specific, Macroeconomic and Risk Determinants of Banks Profitability: Empirical Evidence from Ghana's Rural Banking Industry.

This paper analyzes bank specific, macroeconomic and some risk determinants of bank profitability of Rural and Community Banks (RCBs) in Ghana. Fixed effect panel regression analysis is applied on 114 RCBs annual financial reports during the period 2005-2013. The results generally suggests that capital adequacy, asset quality, liquidity management, investment, gross domestic product growth rate, inflation, funding risk and bank resilience risk are significant determinants of RCBs profitability though with varying degrees. Whereas management efficiency, and bank size cannot be considered as positive contributors to RCBs profitability. The study also indicates that continuous profitability performance of RCBs can curtail shortfall in funding risk and enhance RCBs stability. Keywords: Bank Performance, Bank Specific Determinants, Macroeconomic Factors, Risk Factors JEL Classifications: C5, E4, G2, G2

Modeling the Macroeconomic and Demographic Determinants of Life Insurance Demand in Ghana Using the Elastic Net Algorithm

The government of Ghana and the National Insurance Commission have shown concern over the low insurance patronage in Ghana. In order to take the necessary steps to increase insurance patronage, there is the need to, among other things, find the macroeconomic determinants of insurance demand in Ghana. The purpose of this study is to model the macroeconomic and demographic determinants of life insurance demand in Ghana. Data covering the period 1994 through 2020 are used for the study. Even though many studies have been done on determinants of insurance demand elsewhere (not in Ghana), almost all these studies use ordinary least square regression, stepwise regression, or similar regression methods. However, these methods are not robust enough to handle problems of multicollinearity, over-fitting, and inability to do out-of-sample prediction. This current study uses a regularization method known as elastic net regression algorithm which is more robust for handling the aforementioned problems, and more. The results of the study show that the dominating predictors (those with non-zero coefficients) of life insurance demand include old aged dependency ratio, life expectancy, urbanization, and financial development. The first three have positive relation with life insurance demand, while the last one has negative relation with life insurance demand. Insurance regulators and insurance companies are advised to design more innovative and attractive insurance policies for the aged and the old aged dependents as they have the highest tendency to affect insurance demand in Ghana