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The Effects of Foreign Bank Entry on Financial Performance of Domestic-Owned Banks in Ghana

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  • Nsiah K. Acheampong

Abstract

This article empirically examines the effects of foreign bank entry on the financial performance of Merchant Bank Ghana Limited (MBG) and Ghana Commercial Bank Limited (GCB) in Ghana from 1975 to 2008. The most consistent result from the pooled regression was that foreign bank entry increased domestic banks’ return on assets for the period 1992-2008; a period with a high influx of foreign banks into Ghana. This result supports studies by Beck, Demirgüç-Kunt, and Levine (2006) and Boldrin and Levine (2009) that found foreign bank entry improved domestic banks’ profitability margins. In addition, liquidity had a relatively larger multiplier effect on domestic banks’ return on assets for the period 1975- 1991 than any other independent variables in the study. The presence of foreign-owned banks was not detrimental to the financial performance of domestic-owned banks in Ghana.

Suggested Citation

  • Nsiah K. Acheampong, 2013. "The Effects of Foreign Bank Entry on Financial Performance of Domestic-Owned Banks in Ghana," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 7(3), pages 93-104.
    • Handle: RePEc:ibf:ijbfre:v:7:y:2013:i:3:p:93-104
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    Cited by:

    1. Nuri BALTACI & Gizem AKBULUT & Gürsan CÝVELEK, 2014. "The Relationship between Foreign Banking and Credit Access: Panel Analysis Method," Journal of Economics and Political Economy, KSP Journals, vol. 1(1), pages 39-48, September.
    2. Süer, Ömür & Levent, Haluk & Şen, Süleyman, 2016. "Foreign entry and the Turkish banking system in 2000s," The North American Journal of Economics and Finance, Elsevier, vol. 37(C), pages 420-435.
    3. Freeman Brobbey Owusu & Abdul Latif Alhassan, 2021. "Asset‐Liability Management and bank profitability: Statistical cost accounting analysis from an emerging market," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(1), pages 1488-1502, January.
    4. Yakubu, Ibrahim Nandom & Bunyaminu, Alhassan & Abdallah, Iliasu, 2022. "Motivations for Foreign Bank Entry in Ghana: A Country-level Analysis," MPRA Paper 115234, University Library of Munich, Germany.

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    More about this item

    Keywords

    Capital Adequacy Ratio; Emerging Market Economies; Foreign Bank Entry; Domestic-owned Banks; Liquidity; Pooled Regression Analysis; Return on Assets;
    All these keywords.

    JEL classification:

    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • F2 - International Economics - - International Factor Movements and International Business
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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