Anthony Kofi; Krakah & Aeron; Ameyaw , pp. 46. MAM/Sektionen för Management, 2010.
The financial world today is gradually becoming a global village in itself. The level of offshore banking in both developing and developed countries today is evidence to this fact. Since the financial wheel is critical in any development paradigm, the role of banks is even more critical. Therefore the survival and performance of banks is of much interest not only to policy makers and shareholders, but it is also of interest to researchers. The intriguing report that banks in Sub-Sahara Africa as a whole make much profit than those in the developed world (Valentina Flamini et al., 2009) calls for some introspection to verify the case of Ghana.
It is in this light that we employed regression analysis to estimate and examine the determinants of the profitability of commercial in banks, by examining the drivers of the bank’s profitability using the Ghana Commercial Bank Ltd and Merchant Bank Ltd as case studies, following an examination of the performance of the two Banks in the two decades.
Results from the study reveal that the performances of the Banks have been highly volatile with the banks recoding negative profits during some periods within the two decade under study. The study also revealed that non-interest income, non-interest expense, bank's capital strength, natural log of total assets, growth of money supply, and annual rate of inflation are significant key drivers of banks’ profitability in Ghana. However, the size of the Ghanaian economy and loan loss provision or provisions for bad debt did not have any significant impact on the banks profitability.