Does Asset Quality Persist on Bank Lending Behaviour? Empirical Evidence from Ghana

Mr. Mr. Abdul Latif Alhassan; Freeman Owusu Brobbey; ABDUL LATIF ALHASSAN

Authors

Mr. Mr. Abdul Latif Alhassan
Freeman Owusu Brobbey
ABDUL LATIF ALHASSAN

Keywords:

asset quality, non-performing loans, bank lending, persistence, deposit, equity, ghana

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.

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Does Asset Quality Persist on Bank Lending Behaviour? Empirical Evidence from Ghana. (2013). Global Journal of Management and Business Research, 13(7), 1-8. https://journalofbusiness.org/index.php/GJMBR/article/view/

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Author Biography

Mr. Mr. Abdul Latif Alhassan

Abdul Latif Alhassan is a prominent academic specialising in risk management, insurance, and financial economics. He currently holds a professorship at the Graduate School of Business, University of Cape Town, where he earned his PhD in Insurance Finance in 2016. Previously, he served as a Teaching Assistant at the University of Ghana Business School, where he obtained his M.Phil in Risk Management and Insurance. His research portfolio includes influential works on asset quality and bank lending behaviour in Ghana, as well as the determinants of life insurance consumption across Africa. With over 60 publications and nearly 1,700 citations, he maintains an h-index of 20 and an i10-index of 30. Dr. Alhassan also contributes as a reviewer for the Global Journal of Management and Business Research, reflecting his deep expertise in business economics, financial markets, and development finance.

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