The Effects of Foreign Bank Entry on Financial Performance of Domestic-Owned Banks in Ghana

Nsiah K. Acheampong

The International Journal of Business and Finance Research, 2013, vol. 7, issue 3, 93-104

Abstract: This article empirically examines the effects of foreign bank entry on the financial performance of Merchant Bank Ghana Limited (MBG) and Ghana Commercial Bank Limited (GCB) in Ghana from 1975 to 2008. The most consistent result from the pooled regression was that foreign bank entry increased domestic banks’ return on assets for the period 1992-2008; a period with a high influx of foreign banks into Ghana. This result supports studies by Beck, Demirgüç-Kunt, and Levine (2006) and Boldrin and Levine (2009) that found foreign bank entry improved domestic banks’ profitability margins. In addition, liquidity had a relatively larger multiplier effect on domestic banks’ return on assets for the period 1975- 1991 than any other independent variables in the study. The presence of foreign-owned banks was not detrimental to the financial performance of domestic-owned banks in Ghana.

Keywords: Capital Adequacy Ratio; Emerging Market Economies; Foreign Bank Entry; Domestic-owned Banks; Liquidity; Pooled Regression Analysis; Return on Assets (search for similar items in EconPapers)
JEL-codes: E4 F2 G28 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (5)

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