Abstract

This study investigates the determinants of net interest margin and the role of the financial crisis in explaining net interest margin (NIM) in the banking industry in Ghana. Further, we assess the sensitivity of our results to the measure of credit risk. We observe a sharp drop in NIM and an increase in bad debt growth during the 2007-2009 financial crisis in Ghana's banking sector. Depending on the definition of credit risk, we observe marginal differences in the magnitude and significance of the determinants of NIM. Generally, NIM is explained by bank-specific, industry and macroeconomic factors. We find risk aversion, operating cost, inflation rate and previous year's GDP growth to be robust drivers of NIM.

Keywords

Banking; Net Interest Margin; Financial crisis; Ghana

Published in

Journal of African Business
2015, Volume: 16, number: 3, pages: 272-288

SLU Authors

• Amuakwa Mensah, Franklin

  • Department of Economics, Swedish University of Agricultural Sciences
    

• Marbuah, George

  • Department of Economics, Swedish University of Agricultural Sciences
    

Sustainable Development Goals

Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all


UKÄ Subject classification

Business Administration
Economics


Publication identifier

DOI: https://doi.org/10.1080/15228916.2015.1069679

Permanent link to this page (URI)

https://res.slu.se/id/publ/68164