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Bank risk and performance in Ghana

Author

Listed:
  • Theodora A. Odonkor
  • Kofi A. Osei
  • Joshua Abor
  • Charles K.D. Adjasi

Abstract

This paper examines the effect of risk on bank performance in Ghana. A panel data analysis of 18 banks over the period 1997-2008 is used in the study. The results show that lower risk levels lead to an increase in bank performance. In addition, the results show that when ownership interacts with risk, domestic banks that reduce risk are more likely to perform better than foreign banks with similar risk profiles. We also find that when size interacts with risk, bigger banks which engage in lower risk taking have lower performance. Relative to smaller banks, larger banks could increase activities aggressively and accommodate more risk leading to higher performance. Our results generally call for prudence in bank risk management by risk managers and central bankers alike.

Suggested Citation

  • Theodora A. Odonkor & Kofi A. Osei & Joshua Abor & Charles K.D. Adjasi, 2011. "Bank risk and performance in Ghana," International Journal of Financial Services Management, Inderscience Enterprises Ltd, vol. 5(2), pages 107-120.
    • Handle: RePEc:ids:ijfsmg:v:5:y:2011:i:2:p:107-120
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    Citations

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    Cited by:

    1. Theodora Akweley Odonkor & Bright Addiyiah Osei & Bo Sjö, 2016. "Risk-taking, Ownership and Excess Reserves in the Ghanaian Banking System," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 15(2), pages 147-168, August.
    2. Eric Dei Ofosu-Hene & Peter Amoh, 2016. "Risk Management and Performance of Listed Banks in Ghana," European Journal of Business Science and Technology, Mendel University in Brno, Faculty of Business and Economics, vol. 2(2), pages 107-121.
    3. Yinka M. Salaudeen & Taibat A. Atoyebi & Bamidele A. Oyegbile, 2018. "Enterprise Risk Management and Performance of Selected Listed Consumer Goods Companies in Nigeria," Applied Finance and Accounting, Redfame publishing, vol. 4(1), pages 112-121, February.

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