European Journal of Business Science and Technology 2016, 2(2):107-121 | DOI: 10.11118/ejobsat.v2i2.46

Risk Management and Performance of Listed Banks in Ghana

Eric Dei Ofosu-Hene¹, Peter Amoh²

¹ University of Ghana, Accra, Ghana

² FinRisk Solutions, Accra, Ghana

The objective of the study was in two parts; first, to construct an overall risk index to ascertain risk level of banks listed on Ghana Stock Exchange (GSE), second, to ascertain whether there is a significant relationship between risk management and bank performance. Secondary data of all listed banks on GSE over the period 2007-2014 was used and a panel regression data approach and a risk index were constructed for all listed banks. Findings show that, banks listed on Ghana Stock Exchange have declining risk indexes on average over the latter part of the study period indicating that the Ghanaian Banking Regulator may have to impose additional prudential and regulatory requirements to ensure banks remain solvent. We also find evidence that risk management is positively related to performance of GSE listed banks when the latter is measured from ROE perspective.

Keywords: capital adequacy, risk management, Ghana stock exchange, bank performance, risk index

JEL classification: G21, G28, G32, G38, L25

Published: December 30, 2016  Show citation