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Executive Compensation, Ownership Structure and Loan Quality of Banks in Ghana

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  • Gifty Adjei-Mensah
  • Mohammed Amidu
  • Joshua Yindenaba Abor

Abstract

type="main" xml:lang="en"> This paper analyses the effects of executive compensation and ownership structure on loan quality of banks. The study uses a panel data on 26 Ghanaian banks over the period, 2003–2011. Using a dynamic panel model, estimations are made using the Generalized Method of Moments. The results show that management is efficient when director shareholding is very prominent in banks. Institutional ownership and public listing of banks also have a significantly negative relationship with non-performing loans, while lag of non-performing loans, equity ratio, exchange rate depreciation and increases in net interest margins are seen to have a negative effect on loan quality. Executive compensation had no significant effect on loan monitoring.

Suggested Citation

  • Gifty Adjei-Mensah & Mohammed Amidu & Joshua Yindenaba Abor, 2015. "Executive Compensation, Ownership Structure and Loan Quality of Banks in Ghana," African Development Review, African Development Bank, vol. 27(3), pages 331-341, September.
    • Handle: RePEc:bla:afrdev:v:27:y:2015:i:3:p:331-341
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    Cited by:

    1. Abraham Simon Otim Emuron & Tian Yixiang, 2020. "Financial distress and non‐executive director compensation: Evidence from state‐owned enterprises in South Africa post King III," African Development Review, African Development Bank, vol. 32(2), pages 228-239, June.
    2. Odunayo Magret Olarewaju, 2020. "Investigating the factors affecting nonperforming loans in commercial banks: The case of African lower middle‐income countries," African Development Review, African Development Bank, vol. 32(4), pages 744-757, December.
    3. Zied Saadaoui, 2018. "Dealing with High Bank Interest Margins in Tunisia: A Dynamic Panel Investigation," African Development Review, African Development Bank, vol. 30(4), pages 434-448, December.
    4. Anthonia T. Odeleye, 2018. "Quality of Corporate Governance on Dividend Payouts: The Case of Nigeria," African Development Review, African Development Bank, vol. 30(1), pages 19-32, March.
    5. Clement Olalekan Olaniyi & Olufemi Bodunde Obembe & Emmanuel Oluwole Oni, 2017. "Analysis of the Nexus between CEO Pay and Performance of Non-Financial Listed Firms in Nigeria," African Development Review, African Development Bank, vol. 29(3), pages 429-445, September.
    6. Jonas Ladime & Rayenda Khresna Brahmana, 2021. "Role of controlling shareholders on the performance of efficient African banks," African Development Review, African Development Bank, vol. 33(2), pages 316-328, June.
    7. Douglas A. Adu & Basil Al‐Najjar & Thitima Sitthipongpanich, 2022. "Executive compensation, environmental performance, and sustainable banking: The moderating effect of governance mechanisms," Business Strategy and the Environment, Wiley Blackwell, vol. 31(4), pages 1439-1463, May.

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