Alhassan, Abdul Latif and Owusu Brobbey, Freeman and Effah Asamoah, Michael (2013): Does Asset Quality Persist on Bank Lending Behaviour? Empirical Evidence from Ghana. Published in: Global Journal of Management and Business Research , Vol. 13, No. 4 (March 2013): pp. 1-8.
Preview |
PDF
MPRA_paper_48177.pdf Download (442kB) | Preview |
Abstract
Purpose: The objective of this study is to examine the persistence of bank asset quality on bank lending behaviour in Ghana. Data/Methodology: Using a dataset from the Bank of Ghana for 25 Ghanaian banks from 2005 to 2010, the study employed a random effects (RE) model with AR(1) and heteroskedastic disturbances to test the relationship between bank lending behaviour proxied as the ratio loans and advances to total asset and bank asset quality (ratio of nonperforming loans to gross loans and advances) while controlling for deposit mobilization, equity, management efficiency, intermediation spread and income diversification. Findings: The empirical estimation found that the effect of the deterioration of bank asset quality (high levels of non-performing loans) on bank lending behaviour is persistence and not contemporaneous. Additionally, bank deposit mobilization, intermediation spread and equity were also found to influence bank lending behaviour. Originality/Value: This paper is the first study to examine the persistence impact of the three classes of asset quality on bank intermediation functions in Ghana.
Item Type: | MPRA Paper |
---|---|
Original Title: | Does Asset Quality Persist on Bank Lending Behaviour? Empirical Evidence from Ghana |
Language: | English |
Keywords: | asset quality, non-performing loans, bank lending, persistence, deposit, equity, ghana. |
Subjects: | G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages |
Item ID: | 48177 |
Depositing User: | MR ABDUL LATIF ALHASSAN |
Date Deposited: | 19 Mar 2014 06:48 |
Last Modified: | 29 Sep 2019 12:35 |
References: | 1. Amidu, M. and Hinson, R. (2006) "Credit Risk, Capital Structure And Lending Decisions Of Banks In Ghana" Banks and Bank Systems / Volume 1, Issue 1, 2006. 2. Anin, T. E. (2000), Banking in Ghana, Woeli Publishing Services. 3. Ayuso, J., Perez, D. and Saurina, J. (2004), "Are capital buffers pro-cyclical? Evidence from Spanish panel data", Journal of Financial Intermediation, Vol. 13, pages 249–264. 4. Banking Law, 1989 (P.N.D.C.L. 225). 5. Bank of Ghana (1992), Annual Report and Accounts Accra. 6. Bank of Ghana Act (2002) Act 612. 7. Banking Act, 2004 (Act 673). 8. Baltagi, H.B., (1995), "Econometric Analysis of Panel Data", John Wiley and Sons, New York. 9. Bernanke, B. S., Cara S. L. and Benjamin M. F. (1991), “The Credit Crunch”, Brookings Papers on Economic Activity, Vol. 1991, No. 2, pages 205-247. 10. Bernanke, B.S. and Gertler, M. (1995), "Inside the black box: the credit channel of monetary policy transmission", Journal of Economic Perspectives, Vol. 9, pages 27–48. 11. Bouvatier, V. and Lepetit, L. (2007), " Banks’ procyclical behavior: Does provisioning matter?” Journal of International Financial Markets, Institutions and Money, 321, pages 1-14. Online from: 10.1016/j.intfin.2007.07.004. 12. De Haas, R., Ferreira, D. and Taci, A. (2010), "What determines the composition of banks’ loan portfolios? Evidence from transition countries", Journal of Banking & Finance, Vol. 34, pages 388–398. 13. Djiogap, C.P. and Ngomsi, A. (2012), "Determinants of Bank Long-term Lending Behavior in the Central African Economic and Monetary Community (CEMAC)", Review of Economics & Finance, Academic Research Centre of Canada, ISSNs: 1923- 7529; 1923-8401, pages 107-114. 14. Gambera, M. (2000), “Simple Forecasts of Bank Loan in the Business Cycle”, Emerging Issues Series, Vol. 3, pages 1–27. 15. Ehrmann, M., Gambarcota, L., Martinez-Pag`es, J., Sevestre, P. and Worms, A. (2003), Financial system and the role of banks in monetary policy transmission in the Euro Area. In: Angeloni, I., Kashyap, A., Mojon, B. (Eds.), Monetary Policy Transmission in the Euro Area. Cambridge University Press. 16. Gambacorta, L. and Mistrulli, P.E. (2004), “Does bank capital affect lending behavior?” Journal of Financial Intermediation, Vol. 13, pages 436-57. 17. Furfine, C. (2001) "Bank portfolio allocation: the impact of capital requirements, regulatory. Monitoring and economic conditions", Journal of Financial Services Research, Vol. 20, pages 33–56. 18. Hausman, J. A. (1978), “Specification tests in econometrics", Econometrica 46:6, pages 1251-1271. 19. International Monetary Fund, (2011), "Ghana: Financial System Stability Assessment Update", IMF Country Report No. 11/131. 20. Kapur, I., Hadjimichael, M. T., Hilber P., and Szymczak, P. (1991) “Ghana: Adjustment and Growth, 1983-1991, Washington, DC: IMF Occasional Paper, No. 86, September”. 21. Kashyap, A.K. and Stein, J.C. (1995), "The impact of monetary policy on bank balance sheets", Carnerige Rochester Conference Series on Public Policy, Vol. 42, pages 151–195. 22. Kashyap, A.K. and Stein, J.C. (2000), "What do a million observations on bank say about the transmission of monetary policy", The American Economic Review, Vol. 90, pages 407–428. 23. Jokipii, T. and Milne, A. (2008),"The cyclical behaviour of European bank capital buffers, Journal of Banking and Finance, 32, 1440–1451. 24. Olokoyo, F.O. (2011), "Determinants of Commercial Banks’ Lending Behavior in Nigeria", International Journal of Financial Research, Vol. 2, No. 2; pages 61-72. 25. Saarenheimo, Thomas (1995), “Credit Crunch Caused Investment Slump?” Bank of Finland Discussion Papers, 6/95, pages 1-27. 26. Payment Systems Act 2003 (Act 662). 27. Van den Heuvel, S.J. (2002), "The Bank Capital Channel of Monetary Policy", University of Pennsylvania, Mimeo. 28. Zicchino, L. (2005), "A model of bank capital, lending and the macro economy: Basel I versus Basel II", Bank of England, Working Paper, No. 270. |
URI: | https://mpra.ub.uni-muenchen.de/id/eprint/48177 |