This introductory chapter presents the background for the research ; it includes the description of the demand for the survey. The chapter besides inside informations the background to the survey, job statement, aims, research inquiry, range, significance of the survey, every bit good the organisation of the survey.
Background of survey
As fiscal mediators, Bankss play an of import function in the operation of an economic system. This is peculiarly true in the instance of Ghana where Bankss form one of the exclusive suppliers of financess, and their stableness and public presentation are of critical importance to the fiscal system. As such, an apprehension of determiners of their profitableness is indispensable and important to the stableness of the economic system. In banking literature, the determiners of profitableness are through empirical observation good explored although the definition of profitableness varies among surveies.
Levine ( 1997 ) , for case showed that the efficaciousness of fiscal intermediation can impact economic growing while at the same clip bank insolvencies can ensue in systemic crises which have inauspicious effects for the economic system as a whole. This asserted the of import function that bank remains in financing economic activity and contribute to the stableness of the fiscal system ( MPRA ) . Therefore, the determiners of bank public presentation have attracted the involvement of academic research every bit good as of bank direction, fiscal markets and bank supervisors.
Earlier surveies such as ( Bourtke, 1989 ; Molyneux and Thornton, 1992 ) on bank profitableness were normally expressed as a map of internal and external determiners. The internal determiners refer to the factors that originate from bank histories ( balance sheets and/or net income and loss histories ) and hence could be termed micro or bank-specific determiners of profitableness. The external determiners are variables that are non related to bank direction but reflect the economic and legal environment that affects the operation and public presentation of fiscal establishments. A figure of explanatory variables have been proposed for both classs, harmonizing to the nature and intent of each survey.
Surveies covering with internal determiners employ variables such as size, capital, recognition hazard or costs etc. Size is introduced to account for bing economic systems or diseconomies of graduated table in the market. Akhavein et Al. ( 1997 ) and Smirlock ( 1985 ) happen a positive and important relationship between size and bank profitableness. Demirguc- Kunt and Maksimovic ( 1998 ) suggest that the extent to which assorted fiscal, legal and other factors ( e.g. corruptness ) affect bank profitableness is closely linked to steadfast size.
In add-on, as Short ( 1979 ) argues, size is closely related to the capital adequateness of a bank since comparatively big Bankss tend to raise less expensive capital and, therefore, Turning to the external determiners, several factors have been suggested as impacting on profitableness and these factors can farther separate between control variables that describe the macroeconomic environment, such as rising prices, involvement rates and cyclical end product, and variables that represent market features. The latter refer to market concentration, industry size and ownership position. However, for this research survey, merely three internal determiners will be adopted to happen out its consequence on bank profitableness in Ghana.
Most of the surveies have ever been concentrated on developed states go forthing out the developing states such as Ghana and as such this survey tends to analyse the consequence of selected internal determiners consisting recognition hazard direction, ownership and size on the profitableness of Ghanese Bankss over a period.
Statement of the Problem
Most Bankss particularly commercial Bankss in Ghana have over the old ages have relied more on the usage of loaning rates as a agency of maximising their net incomes with less respect to the efficient usage of resources that could ensue in cost minimisation. Harmonizing to Kakrah and Ameyaw ( 2010 ) , over the old ages, loaning rates charged by the commercial Bankss, have exceeded the premier rates charged by the cardinal bank by at least 10 % , taking to an norm of 25 % involvement rate charged by commercial Bankss on the loans. Increasingly the competitory fiscal industry has toned down the sporadic escalation of loaning rates that commercial Bankss slap on their clients. It is hence imperative that Ghanese Bankss appreciate other agencies of mensurating their profitableness and public presentation without overreliance on loaning rates which instead tend to frighten clients off from operating and economy in Bankss.
For this ground, Bankss in general and for the intent of this survey, Bankss in Ghana need to appreciate the function of other indexs and determiners such as efficient recognition hazard direction, size and ownership in heightening the profitableness or public presentation for that affair. This will impel them to vie more expeditiously in the industry through higher profitableness and public presentation.
Aims of the survey
This survey seeks to accomplish the undermentioned aims:
To measure the public presentation of selected Bankss in the Ghanese banking industry
To set up the impact of recognition hazard direction, ownership and size on bank public presentation
The overruling inquiries of this survey include the followers ;
Using different public presentation indexs can selected Bankss be described as high executing Bankss or otherwise?
Is there any interrelatedness between recognition hazard direction, size and ownership and do they hold any impact on bank public presentation?
Significance of the Study
The public presentation of Bankss and other fiscal establishments is important to the endurance of every economic system. The determiners of their success or profitableness is hence of import to analysed as this will travel a long manner to inform the appropriate stakeholders on the consequence of these factors on the public presentation of their Bankss.
The survey intends to cut down the cognition spread in this topic particularly in Ghana. Most of these researches in literature are frequently centered on developed economic systems making less cognition on developing states such as Ghana. Therefore, findings of this survey will add to the few surveies on bank public presentation determiners of Bankss in Ghana and other developing states in the sub part.
Profitableness of every venture is indispensable to its endurance. Profitability tends to find the advancement and productiveness of any organisation and as such, Bankss are no exclusion. The profitableness of Bankss and its determiners is important. This survey hence aims at choosing 16 Bankss in Ghana chiefly ; CAL Bank Limited, Ecobank Ghana Limited, Ghana Commercial Bank Limited, Home Finance Company ( HFC ) Limited, SG-SSG, Standard Chartered Bank Limited Ghana, The Trust Bank ( The Gambia ) , Unique Trust Bank, Unibank Limited, The Trust Bank ( Ghana ) , National Investment Bank ( NIB ) , Agricultural Development Bank ( ADB ) , Fidelity Bank, Intercontinental Bank, Prudential Bank Limited ( PBL ) and Zenith Bank Limited. These sampled Bankss will function as footing for determining how their profitableness is affected by size, ownership and recognition hazard direction over a five twelvemonth period ( 2005 to 2010 ) .
Notwithstanding the huge importance of the survey, fiscal informations for all targeted Bankss may non be acquired for the full survey period ( 2005 to 2010 ) . Due to this, findings may non be generalized but may be carefully considered by other staying Bankss in the state since they are found in the same industry and market.
Organization of the survey
This survey will be organized into five ( 5 ) chapters. Chapter one will incorporate the background to the survey, job statement, significance of the survey, range and restrictions of the survey.
Chapter two will be devoted to the reappraisal of literature. It will incorporate a theoretical reappraisal and empirical grounds gathered on the topic of survey.
Chapter three will depict the methodological analysis to be used for this survey. This will consist the research scheme, beginnings and method of informations aggregation, the type of informations ( primary and secondary ) every bit good as description of the manner of the analysis and presentation of informations.
Chapter four will discourse research findings ensuing from the analysis of informations and Chapter five will sum up the full research and conclude the survey every bit good as give recommendations for policy alteration and intrenchment.