An Evaluation of the Risk Profile of the Banking Industry in Ghana and its Implication on the National Economy

Ransford Quarmyne Churchill

doi:doi:10.11648/j.ijefm.20130106.23

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An Evaluation of the Risk Profile of the Banking Industry in Ghana and its Implication on the National Economy

Ransford Quarmyne Churchill

Published in International Journal of Economics, Finance and Management Sciences (Volume 1, Issue 6)

Received: 10 October 2013 Published: 20 November 2013

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Abstract

The banking system is central to the economic management of every country. The impact of the global financial crisis and developments in some economies therefore call for a thorough assessment of the risk management framework of the Ghanaian banking sector. The main theme that runs through this study is the assessment of the risk profile of the Ghanaian banking industry and the potential effects of any mismanagement of the sector, on the economy. The study exposits on risk management in the banks as theoretical framework. Then, on the strength of analytical tools as trend analysis, benchmarks and charts, it analyzes available records between 2007 and 2012 to assess the sector in the areas of balance sheet items, credit, market and operational risks standards in the sector. It as well uses the level of implementation of the BCBS accords as a yardstick to infer the sector’s risk profile and evaluates the implications of non-adherence to the recommendation therein. It settles on the note that despite the good risk standards in the areas of capital adequacy, sound liquidity ratio and profitability of the industry, the high rate of Non-Performing Loan, the cedi instability, the inadequacy of the implementation of the Basel accords and operational deficiencies presents yet the weakness of the sector that vitiates the risk stature of the sector. On the balance of probability therefore, the sector generally does not have the best risk profile. There is therefore the need to keep a keen eye on the sector as any untoward developments in the sector could easily spillover to affect the national economy.

Published in	International Journal of Economics, Finance and Management Sciences (Volume 1, Issue 6)
DOI	10.11648/j.ijefm.20130106.23
Page(s)	367-373
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2013. Published by Science Publishing Group

Keywords

Risk, Basel Committee, Banking, Supervision, Economy, Growth, Non-Performing Loans, Ghana

References

[1]	Basel Committee on Banking Supervision (1999), Principles for the Management of Credit risk‖, Bank for International Settlements, Basel.
[2]	Basel Committee on Banking Supervision (2001), Principles for the Management and Supervision of Interest Rate Risk‖, Bank for International Settlements, Basel.
[3]	Basel Committee on Banking Supervision (2003), Sound Practices for the Management and Supervision of Operational Risk, Bank for International Settlements, Basel.
[4]	Basel Committee on Banking Supervision (2003), Trends in risk integration and aggregation, Bank for International Settlements, Basel.
[5]	Basel Committee on Banking Supervision (2006), Corporate Governance for Banking Organizations (Enhancing Corporate Governance for Banking Organizations), Bank for International Settlements, Basel.
[6]	Basel Committee on Banking Supervision (2008), Principles for Sound Liquidity Risk Management and Supervision‖, Bank for International Settlements, Basel.
[7]	Bessis, J. (2010), Risk Management in Banking, Wiley, Third edition.
[8]	Böblingan, J.G. (2008) "The Risks of Financial Risk Management", Master’s Thesis, Zeppelin University.
[9]	Fatemi, A. &Glaum, M. (2000), Risk management practices in German firms‖, Managerial Finance, 26, 1–17.
[10]	Froot, K. A., Scharfstein, D. S., & Stein, J. C. (1994), A Framework for Risk Management‖, Harvard Business Review, 76(6), pp. 91-102.
[11]	Oldfield, G. &Santomero A. M. (1995), The Place of Risk Management in Financial Institutions‖, Wharton Financial Institutions Center, University of Pennsylvania, Working Paper 95-05-B.
[12]	Pyle, D. H. (1997) "Bank Risk Management: Theory," Institute of Business and Economic Research, University of California, Finance Working Paper No. RPF-272, July 1997.
[13]	Rejda, G. E. (1998), Principles of risk management and insurance, USA: Addison Wesley, Sixth Edition, New York, NY.
[14]	Santomero, A.M. (1995) "Financial Risk Management: The Whys and Hows," Financial Markets, Institutions and Instruments 4(5):1-14.
[15]	Schmit, J. T. & Roth K. (1990), "Cost Effectiveness of Risk Management Practices," Journal of Risk and Insurance, Vol. 57, No.3 pp. 455-470
[16]	Stulz, R. M. (1984), Optimal Hedging Policies‖, The Journal of Financial and Quantitative Analysis, Vol. 19, No. 2. pp. 127-140.

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Ransford Quarmyne Churchill. (2013). An Evaluation of the Risk Profile of the Banking Industry in Ghana and its Implication on the National Economy. International Journal of Economics, Finance and Management Sciences, 1(6), 367-373. https://doi.org/10.11648/j.ijefm.20130106.23

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Ransford Quarmyne Churchill. An Evaluation of the Risk Profile of the Banking Industry in Ghana and its Implication on the National Economy. Int. J. Econ. Finance Manag. Sci. 2013, 1(6), 367-373. doi: 10.11648/j.ijefm.20130106.23

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AMA Style

Ransford Quarmyne Churchill. An Evaluation of the Risk Profile of the Banking Industry in Ghana and its Implication on the National Economy. Int J Econ Finance Manag Sci. 2013;1(6):367-373. doi: 10.11648/j.ijefm.20130106.23

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@article{10.11648/j.ijefm.20130106.23,
  author = {Ransford Quarmyne Churchill},
  title = {An Evaluation of the Risk Profile of the Banking Industry in Ghana and its Implication on the National Economy},
  journal = {International Journal of Economics, Finance and Management Sciences},
  volume = {1},
  number = {6},
  pages = {367-373},
  doi = {10.11648/j.ijefm.20130106.23},
  url = {https://doi.org/10.11648/j.ijefm.20130106.23},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijefm.20130106.23},
  abstract = {The banking system is central to the economic management of every country. The impact of the global financial crisis and developments in some economies therefore call for a thorough assessment of the risk management framework of the Ghanaian banking sector. The main theme that runs through this study is the assessment of the risk profile of the Ghanaian banking industry and the potential effects of any mismanagement of the sector, on the economy. The study exposits on risk management in the banks as theoretical framework. Then, on the strength of analytical tools as trend analysis, benchmarks and charts, it analyzes available records between 2007 and 2012 to assess the sector in the areas of balance sheet items, credit, market and operational risks standards in the sector. It as well uses the level of implementation of the BCBS accords as a yardstick to infer the sector’s risk profile and evaluates the implications of non-adherence to the recommendation therein. It settles on the note that despite the good risk standards in the areas of capital adequacy, sound liquidity ratio and profitability of the industry, the high rate of Non-Performing Loan, the cedi instability, the inadequacy of the implementation of the Basel accords and operational deficiencies presents yet the weakness of the sector that vitiates the risk stature of the sector. On the balance of probability therefore, the sector generally does not have the best risk profile. There is therefore the need to keep a keen eye on the sector as any untoward developments in the sector could easily spillover to affect the national economy.},
 year = {2013}
}

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TY  - JOUR
T1  - An Evaluation of the Risk Profile of the Banking Industry in Ghana and its Implication on the National Economy
AU  - Ransford Quarmyne Churchill
Y1  - 2013/11/20
PY  - 2013
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T2  - International Journal of Economics, Finance and Management Sciences
JF  - International Journal of Economics, Finance and Management Sciences
JO  - International Journal of Economics, Finance and Management Sciences
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EP  - 373
PB  - Science Publishing Group
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AB  - The banking system is central to the economic management of every country. The impact of the global financial crisis and developments in some economies therefore call for a thorough assessment of the risk management framework of the Ghanaian banking sector. The main theme that runs through this study is the assessment of the risk profile of the Ghanaian banking industry and the potential effects of any mismanagement of the sector, on the economy. The study exposits on risk management in the banks as theoretical framework. Then, on the strength of analytical tools as trend analysis, benchmarks and charts, it analyzes available records between 2007 and 2012 to assess the sector in the areas of balance sheet items, credit, market and operational risks standards in the sector. It as well uses the level of implementation of the BCBS accords as a yardstick to infer the sector’s risk profile and evaluates the implications of non-adherence to the recommendation therein. It settles on the note that despite the good risk standards in the areas of capital adequacy, sound liquidity ratio and profitability of the industry, the high rate of Non-Performing Loan, the cedi instability, the inadequacy of the implementation of the Basel accords and operational deficiencies presents yet the weakness of the sector that vitiates the risk stature of the sector. On the balance of probability therefore, the sector generally does not have the best risk profile. There is therefore the need to keep a keen eye on the sector as any untoward developments in the sector could easily spillover to affect the national economy.
VL  - 1
IS  - 6
ER  -

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Author Information

Ransford Quarmyne Churchill

Department of Accountancy, Accra Polytechnic, Ghana

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APA Style

Ransford Quarmyne Churchill. (2013). An Evaluation of the Risk Profile of the Banking Industry in Ghana and its Implication on the National Economy. International Journal of Economics, Finance and Management Sciences, 1(6), 367-373. https://doi.org/10.11648/j.ijefm.20130106.23

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ACS Style

Ransford Quarmyne Churchill. An Evaluation of the Risk Profile of the Banking Industry in Ghana and its Implication on the National Economy. Int. J. Econ. Finance Manag. Sci. 2013, 1(6), 367-373. doi: 10.11648/j.ijefm.20130106.23

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AMA Style

Ransford Quarmyne Churchill. An Evaluation of the Risk Profile of the Banking Industry in Ghana and its Implication on the National Economy. Int J Econ Finance Manag Sci. 2013;1(6):367-373. doi: 10.11648/j.ijefm.20130106.23

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@article{10.11648/j.ijefm.20130106.23,
  author = {Ransford Quarmyne Churchill},
  title = {An Evaluation of the Risk Profile of the Banking Industry in Ghana and its Implication on the National Economy},
  journal = {International Journal of Economics, Finance and Management Sciences},
  volume = {1},
  number = {6},
  pages = {367-373},
  doi = {10.11648/j.ijefm.20130106.23},
  url = {https://doi.org/10.11648/j.ijefm.20130106.23},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijefm.20130106.23},
  abstract = {The banking system is central to the economic management of every country. The impact of the global financial crisis and developments in some economies therefore call for a thorough assessment of the risk management framework of the Ghanaian banking sector. The main theme that runs through this study is the assessment of the risk profile of the Ghanaian banking industry and the potential effects of any mismanagement of the sector, on the economy. The study exposits on risk management in the banks as theoretical framework. Then, on the strength of analytical tools as trend analysis, benchmarks and charts, it analyzes available records between 2007 and 2012 to assess the sector in the areas of balance sheet items, credit, market and operational risks standards in the sector. It as well uses the level of implementation of the BCBS accords as a yardstick to infer the sector’s risk profile and evaluates the implications of non-adherence to the recommendation therein. It settles on the note that despite the good risk standards in the areas of capital adequacy, sound liquidity ratio and profitability of the industry, the high rate of Non-Performing Loan, the cedi instability, the inadequacy of the implementation of the Basel accords and operational deficiencies presents yet the weakness of the sector that vitiates the risk stature of the sector. On the balance of probability therefore, the sector generally does not have the best risk profile. There is therefore the need to keep a keen eye on the sector as any untoward developments in the sector could easily spillover to affect the national economy.},
 year = {2013}
}

Copy | Download

TY  - JOUR
T1  - An Evaluation of the Risk Profile of the Banking Industry in Ghana and its Implication on the National Economy
AU  - Ransford Quarmyne Churchill
Y1  - 2013/11/20
PY  - 2013
N1  - https://doi.org/10.11648/j.ijefm.20130106.23
DO  - 10.11648/j.ijefm.20130106.23
T2  - International Journal of Economics, Finance and Management Sciences
JF  - International Journal of Economics, Finance and Management Sciences
JO  - International Journal of Economics, Finance and Management Sciences
SP  - 367
EP  - 373
PB  - Science Publishing Group
SN  - 2326-9561
UR  - https://doi.org/10.11648/j.ijefm.20130106.23
AB  - The banking system is central to the economic management of every country. The impact of the global financial crisis and developments in some economies therefore call for a thorough assessment of the risk management framework of the Ghanaian banking sector. The main theme that runs through this study is the assessment of the risk profile of the Ghanaian banking industry and the potential effects of any mismanagement of the sector, on the economy. The study exposits on risk management in the banks as theoretical framework. Then, on the strength of analytical tools as trend analysis, benchmarks and charts, it analyzes available records between 2007 and 2012 to assess the sector in the areas of balance sheet items, credit, market and operational risks standards in the sector. It as well uses the level of implementation of the BCBS accords as a yardstick to infer the sector’s risk profile and evaluates the implications of non-adherence to the recommendation therein. It settles on the note that despite the good risk standards in the areas of capital adequacy, sound liquidity ratio and profitability of the industry, the high rate of Non-Performing Loan, the cedi instability, the inadequacy of the implementation of the Basel accords and operational deficiencies presents yet the weakness of the sector that vitiates the risk stature of the sector. On the balance of probability therefore, the sector generally does not have the best risk profile. There is therefore the need to keep a keen eye on the sector as any untoward developments in the sector could easily spillover to affect the national economy.
VL  - 1
IS  - 6
ER  -

Copy | Download