Impact of Financial Risk Indicators on Banks' Financial Performance in Ghana

Tan Zhongming, Samuel Frimpong and Ding Guoping

Business and Economic Research, 2019, vol. 9, issue 4, 23-52

Abstract: This research is to study the impact of some financial risk indicators on fifteen selected commercial banks' in Ghana. The indication from the augmented Dickey-Fuller unit root test results show that the data series after first difference at the first order achieved stationarity. The analysis of the data revealed the existence of significant long run relationship between bank financial performance and the variables of financial risk in the banking sector. The granger causality test results reveal that there is unidirectional causality flowing from the variables of financial risk This suggest that the indicators of financial risk strongly and actively stimulate and improve the financial performance of banks in Ghana. The study recommends that bank managers should improve on the management of all the indicators of financial risk variables in order to improve on the achievement of the objective of the firm.

Keywords: Augmented Dickey-Fuller unit root test; Granger causality test; Financial performance (search for similar items in EconPapers)
Date: 2019
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