Financial Innovation and Commercial Banks Performance in Ghana

Benedict Afful, Prince Kofi Mensah Kuwornu and Joseph Kwasi Asafo
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Benedict Afful: Department of Economic Studies, University of Cape Coast, Cape Coast, Ghana,Network for Socioeconomic Research and Advancement (NESRA), Accra, Ghana
Prince Kofi Mensah Kuwornu: Services Integrity Savings and Loans Limited, Ghana,Institute of Chartered Accountants, Ghana
Joseph Kwasi Asafo: Department of Economic Studies, University of Cape Coast, Cape Coast, Ghana

International Journal of Research and Innovation in Social Science, 2021, vol. 05, issue 12, 933-940

Abstract: The study sought to investigate the effect of financial innovation on performance of commercial banks in Ghana. The study used balance panel data over the period of 2009-2018from16 registered and licensed commercial banks. Fixed and random effect models were applied to the data. The findings show that financial innovation and the age of a bank have a significantly positive effect on banks financial performance. However, inflation had a negative effect on financial performance. The study also revealed that asset quality and bank size have a negative effect on net interest margin and return on equity. Share of industry deposit and number of branches have a positive effect on net interest margin. Based on these findings, it was recommended that commercial bank management should introduce more cost-effective products or services to improve bank performance. Management of commercial banks should deploy the services of credit reference bureau to foster reduction in impairment allowance hence improvement in financial performance.

Date: 2021
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