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Financial Innovation and Commercial Banks Performance in Ghana

Author

Listed:
  • Benedict Afful Jr

    (Department of Economic Studies, University of Cape Coast, Cape Coast, Ghana,Network for Socioeconomic Research and Advancement (NESRA), Accra, Ghana)

  • Prince Kofi Mensah Kuwornu

    (Services Integrity Savings and Loans Limited, Ghana,Institute of Chartered Accountants, Ghana)

  • Joseph Kwasi Asafo

    (Department of Economic Studies, University of Cape Coast, Cape Coast, Ghana)

Abstract

The study sought to investigate the effect of financial innovation on performance of commercial banks in Ghana. The study used balance panel data over the period of 2009-2018from16 registered and licensed commercial banks. Fixed and random effect models were applied to the data. The findings show that financial innovation and the age of a bank have a significantly positive effect on banks financial performance. However, inflation had a negative effect on financial performance. The study also revealed that asset quality and bank size have a negative effect on net interest margin and return on equity. Share of industry deposit and number of branches have a positive effect on net interest margin. Based on these findings, it was recommended that commercial bank management should introduce more cost-effective products or services to improve bank performance. Management of commercial banks should deploy the services of credit reference bureau to foster reduction in impairment allowance hence improvement in financial performance.

Suggested Citation

  • Benedict Afful Jr & Prince Kofi Mensah Kuwornu & Joseph Kwasi Asafo, 2021. "Financial Innovation and Commercial Banks Performance in Ghana," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 5(12), pages 933-940, December.
    • Handle: RePEc:bcp:journl:v:5:y:2021:i:12:p:933-940
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    References listed on IDEAS

    as
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    2. Stephen Asante & Daniel Agyapong & Anokye M. Adam, 2011. "Bank Competition, Stock Market and Economic Growth in Ghana," International Journal of Business Administration, International Journal of Business Administration, Sciedu Press, vol. 2(4), pages 33-41, November.
    3. Kyriaki Kosmidou & Constantin Zopounidis, 2008. "Measurement of Bank Performance in Greece," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 6(1), pages 79-95.
    4. Valentina Flamini & Miss Liliana B Schumacher & Mr. Calvin A McDonald, 2009. "The Determinants of Commercial Bank Profitability in Sub-Saharan Africa," IMF Working Papers 2009/015, International Monetary Fund.
    5. Thorsten Beck & Asli Demirgüç-Kunt & Ross Levine, 2007. "Finance, inequality and the poor," Journal of Economic Growth, Springer, vol. 12(1), pages 27-49, March.
    6. Michael Adusei, 2015. "The impact of bank size and funding risk on bank stability," Cogent Economics & Finance, Taylor & Francis Journals, vol. 3(1), pages 1111489-111, December.
    7. Ghazi Zouari & Imen Abdelmalek, 2020. "Financial Innovation, Risk Management, And Bank Performance," Copernican Journal of Finance & Accounting, Uniwersytet Mikolaja Kopernika, vol. 9(1), pages 77-100.
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