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Asset‐Liability Management and bank profitability: Statistical cost accounting analysis from an emerging market

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  • Freeman Brobbey Owusu
  • Abdul Latif Alhassan

Abstract

This paper employs the Statistical Cost Accounting (SCA) model to examine the relationship between profit and Asset‐Liability Management (ALM) structure of 27 banks in Ghana over the period 2007–2015. The findings confirm the central hypothesis of the SCA model and provide evidence that profitability is linked to balance sheet items in Ghana. It also documents evidence that domestic banks have higher rate of return on assets than foreign banks over the study period. In addition, high profit banks were observed to have higher rate of return on assets as well as higher rate of cost on liabilities than low profit banks. These findings provide useful insights to bank management through the identification of the assets items that generate highest return on bank profitability.

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  • Freeman Brobbey Owusu & Abdul Latif Alhassan, 2021. "Asset‐Liability Management and bank profitability: Statistical cost accounting analysis from an emerging market," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(1), pages 1488-1502, January.
    • Handle: RePEc:wly:ijfiec:v:26:y:2021:i:1:p:1488-1502
    DOI: 10.1002/ijfe.1860
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