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    Cost efficiency of Ghana's banking industry: a panel data analysis

    Adjei-Frimpong, Kofi; Gan, Christopher; Hu, Baiding
    Abstract
    This study analyzes the efficiency of the banking industry in Ghana over the period of 2001–2010 using the data envelopment analysis. The study investigates the impact of size, capitalization, loan loss provision, inflation rate and GDP growth rate on Ghana’s bank efficiency using both static and dynamic panel data models. The static model is estimated by the fixed effects estimator whereas the dynamic mdoel is estimated by the two step system GMM estimator. The results suggest that Ghana banks are inefficient. This study reveals that well-capitalized banks in Ghana are less cost efficient. In addition, bank size has no influence on bank cost efficiency suggesting that larger banks in Ghana have no cost advantages over their smaller counterparts. The findings also exhibit that loan loss provision ratio has no effect on bank efficiency in Ghana. This study finds GDP growth rate negatively influences bank cost efficiency and that lagged cost efficiency tends to persist from year to year.... [Show full abstract]
    Keywords
    data envelopment analysis; bank efficiency; cost efficiency; Ghana
    Fields of Research
    1502 Banking, Finance and Investment; 1501 Accounting, Auditing and Accountability
    Date
    2014
    Type
    Journal Article
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    • Department of Financial and Business Systems [469]
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    Adjei-Frimpong, Cost efficiency of Ghana's, 2014.pdf (458.9Kb)
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    https://hdl.handle.net/10182/7344
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