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Does corruption grease or sand the wheels of bank profitability in Ghana?

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  • Ibrahim Nandom Yakubu

Abstract

This paper investigates the effect of corruption on bank profitability in Ghana using bank-level dataset spanning 2008 to 2017. By employing the system Generalized Method of Moments (GMM) technique, the study finds a significant negative relationship between corruption and bank profitability. This supports the “sand the wheels” view on corruption and controverts the “grease the wheels” view, which hypothesizes that corruption boost firm performance. Controlling for bank-specific and macroeconomic factors, the findings further reveal that, while bank size, capital adequacy, and inflation have a significant positive effect on profitability, management efficiency and monetary policy rate negatively and significantly drive bank profits. The study discusses key implications for policy.

Suggested Citation

  • Ibrahim Nandom Yakubu, 2019. "Does corruption grease or sand the wheels of bank profitability in Ghana?," Cogent Economics & Finance, Taylor & Francis Journals, vol. 7(1), pages 1701909-170, January.
    • Handle: RePEc:taf:oaefxx:v:7:y:2019:i:1:p:1701909
    DOI: 10.1080/23322039.2019.1701909
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    Cited by:

    1. Rashedul Hasan & Muhammad Ashfaq, 2021. "Corruption and its diverse effect on credit risk: global evidence," Future Business Journal, Springer, vol. 7(1), pages 1-13, December.
    2. Yakubu, Ibrahim Nandom & Bunyaminu, Alhassan & Doumbia, Musah Osumanu & Abdul-Fatawu, Mohammed, 2023. "The effect of board characteristics and life-cycle on corporate performance," MPRA Paper 117661, University Library of Munich, Germany.
    3. Abdelhak Senadjki & Samuel Ogbeibu & Chee Yin Yip & Hui Nee Au Yong & Mourad Senadjki, 2021. "The impact of corruption and university education on African innovation: evidence from emerging African economies," SN Business & Economics, Springer, vol. 1(5), pages 1-26, May.

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