Effect of capital structure on asset quality of banks
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Date
2023
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KNUST
Abstract
The main objective of the study is to examine the effect of capital structure on asset quality of universal banks in Ghana. In order to achieve this objective, the study utilizes a panel data set obtained from 11 universal banks operating in Ghana with data spanning from 2015 to 2021. The study employs a quantitative approach and explanatory research design. With a 77-firm year observation, this study utilizes secondary data from the audited annual financial statements of the selected banks. To achieve the study objectives, the study conducts descriptive statistics and regression analysis in respect to each objective. The study also carries out the LM-test, F-test and Hausman tests to determine the appropriate model for this study and finds that the fixed-effect model was appropriate for this study. This study recommends that when more loans are granted to customers, the management of the respective banks should come out with stringent credit recovery policies to redeem such loans in order not to go bad and plunge the sector into liquidity crisis. Again, the study recommends that management of the banks under study should mostly go in for long term debt as it has wider duration of payment period and use such funds to grant loans to their customers to earn more interest.
Description
A thesis submitted to the department of accounting and finance, school of business, kwame nkrumah university of science and technology, in partial fulfillment of the requirements for the award of the degree of master of business administration (accounting option)