The impact of interest rate spreads on the profitability of commercial banks in Ghana; a case study of standard Chartered bank Ghana Limited.
Financial intermediation is the main business of financial institutions; transferring of funds from those with excess liquidity but do not have a use for it now to those with shortage of funds but have the need for it. The existence of market imperfections resulting from information asymmetry and transaction cost, allows for some level of interest rate spread resulting from the wedge that exist between what borrowers pay and what lenders receive. The study sought to assess the impact of interest rate spreads on the profitability of Standard Charted Bank (SCB) in Ghana using annual data from 1990 to 2015.The study found evidence that interest rate spreads drives profitability for the bank. This indicates that the high trends in the interest rates spreads among banks is an avenue for the banks to make profit. The study also showed that liquidity risk, operating efficiency and Regulated Deposit Savings Rate have positive impact on profit.
A thesis submitted to the Department of Economics in partial fulfillment of the requirements for award of the degree Master of Science in Economics,