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Credit Risk Management and Its Impact on Financial Performance of Listed Banks in Ghana

Author

Listed:
  • George Ohene Djan
  • Frimpong Stephen
  • Jonas Bawuah
  • Osman Babamu Halidu
  • Peter Kwame Kuutol

Abstract

The study empirically examines the impact of credit risk on performance of banks in Ghana. In the study parameters covered were; default rate, cost per loan assets and capital adequacy ratio. We used 9 banks listed on the Ghana Stock Exchange (GSE) as sample banks for a 10 year period (2005-2014).Comparing performance ratio to default rate, capital adequacy ratio and cost per loan assets which was presented in descriptive, correlation and regression was used to analyze the data. The study revealed that all these parameters have an inverse impact on banks’ performance; however, the default rate is the most predictor of bank financial performance. The recommendation is that banks should design and formulate strategies that is needed for enhancing credit risk management to maintain the prevailing banks financial performance.

Suggested Citation

  • George Ohene Djan & Frimpong Stephen & Jonas Bawuah & Osman Babamu Halidu & Peter Kwame Kuutol, 2016. "Credit Risk Management and Its Impact on Financial Performance of Listed Banks in Ghana," International Journal of Financial Markets, Research Academy of Social Sciences, vol. 2(2), pages 24-32.
    • Handle: RePEc:rss:jnljfm:v2i2p1
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