The effects of non-performing loans on bank profitability.
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Date
2018-03
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KNUST
Abstract
This study investigates the effects of Non-performing loans (NPL) on bank profitability. The study uses the balanced panel data from three banks (HFC Bank, Ecobank and CAL Bank) toanalyse the effects of non-performing loans on the profitability of the selected banks from January 2010 to December 2015. The findings showed that the non-performing loan of the selected banks is neither strong nor weak. Again, the results reveal that non-performing is negatively related to bank profitability whereas capital adequacy ratio is positively related to bank profitability. The study concludes that once the non-performing loan is managed it improves the level of profitability of the banking sector. This reveals some significant policy implications for increasing profitability and protecting banks from crisis. It is recommended that banks should have dedicated credit risk policy and must raise the level of awareness of the need to identify, measure, monitor and control credit risk.
Description
A Dissertation Submitted In Partial Fulfillment Of The Award Of The Degree Of Master Of Science Economics.